KESKO ANNUAL REPORT SUSTAINABILITY

SUSTAINABILITYKESKO ANNUAL REPORT

Keskorsquos Annual Report 2020 has four sections This section describes highlights in sustainability and the objectives and progress made in our sustainability work and provides key sustainability indicators in accordance with GRI standards

SUSTAINABILITY The following symbols indicate that additional information can be found either in this report or on our website

Read more on our website

Read more in the Annual Report

Highlights 2020 3

Sustainability strategy 2018ndash2022 4

Materiality assessment 5

SUSTAINABILITY THEMES 6

Society 7

Financial results and impacts 8

Taxes 10

K-retailers and store network 13

Donations sponsoring and charity 14

Selections and purchasing 15

Sustainability policies 17

Sustainable products 20

Efforts to promote human rights 22

Purchases from Finland and other countries 23

Suppliersrsquo audits and certificates 25

Climate and environment 32

Carbon neutral K Group 2025 33

Renewable energy and energy efficiency 37

Emissions 40

Water 45

Biodiversity 46

Circular economy and waste management 50

Food waste 53

Working community 55

Personnel statistics 56

Occupational capacity and work ability 61

Competence development 67

Performance management 69

Diversity inclusion and equality 70

K Code of Conduct 72

SUSTAINABILITY MANAGEMENT APPROACH AND REPORTING 75

Stakeholder engagement 76

Management approach 79

Reporting principles 82

GRI index 83

Independent Practitionerrsquos Assurance Report 92

KESKOrsquoS DIRECTION CORPORATE GOVERNANCEFINANCIAL REVIEWSUSTAINABILITY

2KESKOrsquoS YEAR 2020 I SuStainability

HIGHLIGHTS 2020

WHAT WE CONTINUE TO WORK ON

WE MADE PROGRESS TOWARDS BECOMING A CARBON NEUTRAL K GROUP in February 2020 we updated our climate targets aiming for carbon neutrality by 2025 with zero emissions from our own operations and transports by 2030 the first some 20 K-food stores have been equipped with our new ingenious heat circulation system the first two all-electric trucks were introduced for deliveries in the Helsinki region We joined the CDP Supply Chain programme and challenge our suppliers to cut their emissions

PROGRESS MADE IN OUR SUSTAINABILITY WORK

SAFE SHOPPING IN STORES DURING THE COVID-19 PANDEMICSince the outbreak of the Covid-19 pandemic ensuring the safety of our employees and customers has been of utmost importance for K Group Kesko and K-retailers have been agile in developing new services such as dedicated shopping hours for at-risk groups more online store services home delivery services and new helpline and phone order services for people over 70

HEALTHIER CHOICES WITH THE K-OSTOKSET SERVICEthe new nutrition section in our data-based K-Ostokset service allows customers to monitor their consumption of sugar salt red meat fish and vegetables they can compare their own data with the national nutrition recommendations and set goals for their consumption K-Ostokset also enables users to measure the domestic content and climate impact of their food shopping

MORE TRANSPARENCY IN SUPPLY CHAINS to improve transparency we share information on the origin of products on our new tracing Our Products website We provide information on the origin of tuna roses and timber and their journey to the shelves of K-stores the website will focus on products that face challenges regarding the sustainable produc-tion of raw materials and whose purchasing is steered by our sustainability policies

WE OPERATE IN A SUSTAINABLE WAY PROMOTING BIODIVERSITY We will strengthen our biodiversity work and prepare division-specific goals to promote biodiversity Our objective is to prevent loss of biodiversity in our operations and value chain We build our selections in such a way that products and their packaging burden biodiversity as little as possible throughout their life cycle

WE ARE PREPARING A PROGRAMME FOR DIVERSITY AND INCLUSION based on stakeholder surveys conducted in early 2020 we outlined the main goals and potential development activities of our programme to build a more diverse and inclusive K Group Our goal is for example to employ more people representing various language minorities and to help persons with partial working capacity to stay in their jobs



SUSTAINABILITY STRATEGY 2018ndash2022

Our sustainability strategy focuses our sustainability efforts increasingly on our customers We want to enable sustainable lifestyles for our customers in terms of food mobility and living

in spring 2019 Keskorsquos board of Directors made sustainability and combatting climate change

more central strategic focus areas

WE ENABLE SUSTAINABLE LIFESTYLES FOR OUR CUSTOMERS

Pursuing leadership in circular economy solutions

Creating data-based services for customers and the society using customer data and AI responsibly

Strengthening responsible and transparent sourcing in the supply chain

Expanding communal responsibility initiatives together with K-retailers and our employees

Commercialisation of sustainability through our own brand products

Continuing our climate work aiming for carbon neutrality for our own operations and transports by 2025 and zero emissions by 2030

VISION

Sustainability and benefits derived from it drive customer

preference in both B2C and B2B

Investors prefer Kesko as a sustainable

investment

Employees and K-retailers are proud advocates of K Groups

sustainability work

K Group has a significant role in societal discussion

through recognised leadership in sustainability

STRATEGIC OBJECTIVES

STRATEGIC ACTIONS

1

2

3

4

5

6

Sustainability strategy 2018-2022

Our sustainability efforts focus increasingly on our customers We want to enable a sustainable lifestyles for our customers in terms of food mobility and living

In spring 2019 Keskos Board of Directors made sustainability and combatting climate change Keskos strategic focus areas



MATERIALITY ASSESSMENT

Keskorsquos materiality assessment identifies the key sustainability topics for Kesko and its stakeholders The materiality assessment guides Keskorsquos sustainability and stakeholder work and defines actions to meet stakeholder expectations

Materiality matrix

Importance of financial social and environmental impacts to Kesko and its operating environment

Leve

l of s

take

hold

er c

once

rn

Our vision Enabling more sustainable consumption and lifestyles

Responsibility of the purchasing chain

Sustainable products

Local responsibility work

Wellbeing of customers

Circular economy solutions

and minimising food waste

Climate change

Personnel responsibility

Diversity and non-discrimination

Responsibility of marketing and customer

information use

Biodiversity

Financial responsibility and good corporate governance



Keskorsquos latest materiality assessment was carried out in autumn 2020 Based on megatrends and background surveys 38 ma terial sustainability topics were identified for Kesko and its stakeholders At a workshop a list of 24 sustainability topics was compiled out of these and the importance of the topics to Kesko and its stakeholders was evaluated at internal and external stakeholder interviews and online surveys On the basis of the results the material sustainability topics were summed up in the workshop into 11 topics of the most material importance for Kesko and its stakeholders The most significant changes compared with the previous materiality assessment were the increased importance of climate change sustainable products and biodiversity The responsibility of purchasing chains and personnel responsibility remained among the most important topics

The results of the materiality assessment determine the content of the Sustainability section of Keskorsquos Annual Report for 2020 and will be utilised in the next update of Keskorsquos sustainability strategy The aim is to replace our responsibility programme which ended in 2020 with the updated sustainability strategy

Keskorsquos material sustainability topics are presented in this matrix where the vertical axle shows the level of stakeholder concern regarding the topics and the horizontal axle shows the importance of financial social and environmental impacts to Kesko and its operating environment

KESTAumlVAumlN KEHITYKSEN JOHTAMISTAPA JA RAPORTOINTI

SUSTAINABILITY THEMES


IN THIS SECTION

Financial results and impacts 8Taxes 10K-retailers and store network 13Donations sponsoring and charity 14

SOCIETY

Our mission is to create welfare responsibly for all our stakeholders and for all society

Kesko and K-retailers are significant employers taxpayers and product and service providers Through our supply chain we indirectly create jobs globally in product development factories farms and logistics for example

We want to enable sustainable lifestyles for our customers in terms of food mobility and living We offer products and services which allow our customers to make more sustainable choices

7KESKOrsquoS YEAR 2020 I SuStainabilityKESKOrsquoS yEaR 2020 i SuStainability

WE PROMOTE THE FOLLOWING UN SUSTAINABLE DEVELOPMENT GOALS



Financial results and impacts

OUR OPERATIONS CREATE ADDED VALUE FOR VARIOUS STAKEHOLDERS 201-1 Keskorsquos operations generate economic benefits for various stakeholders in Keskorsquos operating countries and market areas Key stakeholders include shareholders customers personnel retailers suppliers of goods and providers of services and the society Kesko promotes the growth of welfare throughout its supply chain including developing countries

This section depicts cash flows between Kesko and its stakeholders as well as the distribution of economic value added between stakeholder groups The most important cash flows comprise revenue from customer purchases and retailer operations purchases from suppliers of goods and providers of services dividends to shareholders salaries and wages paid to personnel taxes and capital expenditure

We pay steady dividendsKesko has some 57000 shareholders In the long term Kesko aims to distribute a steadily growing dividend of some 60-100 of its comparable earnings per share taking into account the companyrsquos financial position and strategy Keskorsquos Board of Directors proposes to the Annual General Meeting to be held in April 2021 that a total dividend of euro298 million be paid for the year 2020 which would represent 698 of earnings per share and 774 of comparable earnings per share In 2020 Kesko distributed a total of euro250 million as dividends which represented 748 of earnings per share and 803 of comparable earnings per share

Economic benefits from Keskorsquos operations to stakeholders Continuing operations

euro million 2020 2019 2018Customers1 Revenues 11600 11543 11173Value added generated 11600 11543 11173

Distribution of value addedSuppliers Goods materials and services purchased -10079 -10150 -9920Employees Salaries fees and social security expenses -751 -775 -694Payments to providers of capital Net finance incomecosts -87 -91 -100Owners Dividend -2982 -250 -232Public sector Taxes3 -91 -84 -77Community investments Donations -2 -2 -2Development of business operations 294 191 148

Year 2020 includes Kesko Senukai 1-620201 Incl net sales and other operating income2 Proposal to the General Meeting 3 Incl income taxes real estate taxes and net worth taxes

Economic benefits from Keskorsquos operations by market area in 2020

euro million PurchasesCapital

expenditure

Salaries and share-based

payments

Social security

expenses Taxessup1 TotalFinland 6206 228 434 85 845 7798Other Nordic countries 864 166 119 33 90 1272Baltic countries Poland and Belarus 319 5 68 9 26 428Other countries 1064 0 1065Total 8453 398 623 128 961 10563

The table above includes Kesko Senukai companies between 1-62020 with the exception of purchases and taxes other than those reported as income taxes on income statement1 Taxes include income taxes real estate taxes value-added taxes excise duties car taxes customs duties net-worth taxes and withholding taxes

Our investments impact the whole societyKeskorsquos capital expenditure has a positive financial impact on the operations of for example building firms building sector service companies and suppliers of fixtures equipment and information systems

The capital expenditure for Keskorsquos continuing operations in 2020 totalled euro398 million (2019 euro686 million) or 37 of net sales (2019 64) The store site network is a strategic competitive factor for K Group In 2020 capital expenditure on store sites totalled euro126 million (2019 euro228 million)



Capital expenditure in international operations accounted for 429 (2019 437) of total capital expenditure In addition to Kesko K-retailers invest in eg store fixtures These figures included K Grouprsquos total capital expenditure in Finland in 2020 amounted to some euro274 million

FINANCIAL ASSISTANCE RECEIVED FROM GOVERNMENT201-4 In 2020 Kesko Group received financial assistance totalling euro19 million from the public sector The sum consists mainly of assistance received in Finland (euro11 million) and in Sweden (euro07 million) Most of the public sector assistance received in Finland is related to investments in solar power

Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods

Keskos and K-retailers

capital expenditure1

Salaries paid by Kesko

Salaries paid by K-retailers

Taxes paid by K-retailers Total

Aringland 515 - 00 03 - - 517Southern Karelia 159 105 25 58 138 12 497Southern Ostrobothnia 2691 173 19 45 136 12 3076Southern Savo 472 78 16 37 119 16 737Kainuu 198 94 14 12 76 08 401Kanta-Haumlme 656 181 50 78 140 12 1119Central Ostrobothnia 458 41 05 17 46 04 571Central Finland 509 178 126 78 220 22 1134Kymenlaakso 497 91 67 74 129 09 867Lapland 274 249 83 50 228 31 914Pirkanmaa 2865 400 74 367 494 42 4242Ostrobothnia 1574 128 17 50 117 14 1901Northern Karelia 454 154 24 64 121 14 831Northern Ostrobothnia 1483 477 102 184 331 36 2614Northern Savo 2710 262 57 135 228 21 3412Paumlijaumlt-Haumlme 1314 128 100 111 150 13 1815Satakunta 1754 299 30 68 200 17 2367Uusimaa 35483 1952 1806 3030 1597 183 44052Varsinais-Suomi 7795 813 125 253 470 55 9511Total 61859 5804 2743 4713 4940 520 805801 Incl increase in lease liabilities of K-retailersrsquo equipmentThe figures are for those K-retailers whose accounts and payroll are managed by Vaumlhittaumliskaupan Tilipalvelu VTP Oy representing around 94 of K-retailersrsquo total business volume

Economic benefit generated by Kesko and K-retailers to Finnish regions in 2020



We are a significant taxpayer207-1 207-2 207-3 Kesko adopted the new GRI 207 tax standard in 2020

Keskorsquos Tax Policy describes the key principles applied in the management of taxes as well as the tax governance model and responsibilities The tax policy covers all types of taxes and duties and concerns business areas common operations and Group companies in all of Keskorsquos operating countries The published tax policy approved by Keskorsquos Board of Directors in February 2021 replaces the previously applied (unpublished) tax strategy No major changes have taken place in the tax management principles By publishing the tax policy Kesko aims to increase the transparency of the Grouprsquos management approach to tax

In 2020 Kesko developed tax compliance in several areas in relation to implemented changes in tax legislation Processes related to value-added taxation have been revised in relation to the so called EU Quick Fixes In addition new Group guidance has been implemented in relation to arrangements reportable under the EU DAC6 Directive and applicable local legislation

Erroneous tax law interpretations or non-compliance may expose Kesko to tax disputes and may negatively impact the business and reputation Regular tax audits may lead to reassessment of taxes interest and penalties The Grouprsquos tax positions are regularly reviewed to identify items subject to interpretation Uncertain positions that are assessed

unlikely to be accepted are provided for in tax accounting The Grouprsquos balance sheet on 31 December 2020 does not contain provisions for uncertain tax positions

In 2020 Kesko participated in public policy advocacy on tax through representation associations such as the Confederation of Finnish Industries (EK) the Finnish Commerce Federation and the Finland Chamber of Commerce In Sweden and Norway Kesko is a member of trading industry associations Svensk Handel in Sweden and the Enterprise Federation of Norway (Virke) Stakeholder cooperation and engagement is discussed in more detail in the Stakeholder engagement section of this report No tax related concerns have come up in stakeholder cooperation or in the materiality assessment

Keskorsquos significant Group companies in all operating countries are subject to statutory audits and Auditorrsquos reports are issued The Auditorrsquos report concerning Kesko Corporationrsquos separate financial statements and consolidated financial statements can be found in the Financial Review section The taxes included in accounting and financial statements are subject to audits in each country in accordance with the local legislation on audits In addition in some countries such as Norway the auditor issues a separate report on the companyrsquos tax return Assurance of the information given in the Sustainability section of Keskorsquos Annual Report is discussed in this report in sections Reporting principles and Independent Practitionerrsquos Assurance Report



COUNTRY-SPECIFIC TAX INFORMATION207-4 During the financial period Kesko has had operations and personnel in eight countries where it engages in both retail and wholesale trade A subsidiary of Kesko Onninen Oy has had a Purchasing Office in China which was incorporated in 2020 A permanent establishment was also registered for Onninen Oy in Armenia in 2020 in connection with an export project The taxes of permanent establishments are paid both in the operating country and in Finland and the double taxation is eliminated using credit method Keskorsquos operations in Russia were discontinued during 2019 Keskorsquos subsidiary in Kazakhstan has been dormant in 2019 and 2020 and is therefore not covered in by the country-by-country reporting Keskorsquos group companies are listed in Financials section in Note 52 to the consolidated financial statements

In 2020 Keskorsquos income taxes in Finland totalled euro706 million and in other countries euro139 million The Grouprsquos effective tax rate was 175 Grouprsquos income tax is discussed in the Financials section in Note 27 of the consolidated financial statements

In addition to income taxes Kesko pays real estate and net-worth taxes customs duties car taxes and excise duties and collects and remits withholding taxes and value-added taxes Kesko remits excise duties on confectionery alcohol and soft drinks for example In addition withholding taxes and taxes at source are collected in Finland from the dividends paid by Kesko

taxes by country in 2020

euro million continuing operations

Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and

property taxes Car taxes

Customs duties

Excise duties

Finland 4894 706 4833 1052 51 988 71 746Sweden 53 19 291 138 03 - 01 01Norway 219 66 233 143 01 - 00 -Estonia 38 30 53 10 00 - 01 -Latvia -29 00 16 04 00 - - -Lithuania 71 15 35 10 - - 00 -Poland 35 04 62 13 02 - 02 -Belarus -05 05 - - - - - -China 00 00 00 00 - - - -Armenia 00 00 01 - - - 00 -Total 5276 845 5523 1370 57 988 76 746

Reported figures are based on IFRS reporting and may differ from the local financial statements and taxation1 Income taxes include income taxes booked to income statement deferred taxes excluded Year 2020 income taxes include the income taxes of Kesko Senukai companies from the period 1-62020 From other tax items Kesko Senukai companies are excluded



Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

Finland 3951 660 4624 999 49 1301 64 715Sweden -221 19 282 87 03 - 01 01Norway 17 24 227 163 01 - 00 -Estonia 85 23 214 23 00 - 03 -Latvia -06 02 146 21 01 - 01 -Lithuania 106 30 418 214 00 - 28 -Poland 27 00 29 15 01 - 01 -Belarus 69 20 79 16 04 - 14 -Russia 03 00 - - - - - -China 02 00 00 00 - - - -Total 4033 777 6019 1539 60 1301 111 716

Reported figures are based on IFRS reporting and may differ from the local financial statements and taxation1 Income taxes include income taxes booked to income statement deferred taxes excluded



Country-specific information 2019 euro million continuing operations Finland Sweden Norway Estonia Latvia Lithuania Poland Belarus Russia ChinaPersonnel at 31 Dec 20191 10203 1282 1039 813 1019 3486 810 2515 - 19Salaries 4137 443 562 133 148 621 151 137 01 04Net sales 83799 4080 6201 2058 2246 4973 2372 1465 - 08Groups internal net sales2 88 09 00 40 276 574 00 01 00 -Profit before tax 3951 -221 17 85 -06 106 27 69 03 02Tangible assets 13013 390 380 100 394 185 176 241 00 00Inventories 6477 750 663 301 343 1189 261 393 00 -Income taxes paid 819 13 20 33 01 38 00 23 - -Accrued income taxes3 660 19 24 23 02 30 00 20 00 00Effective cash tax rate 208 -59 1176 393 167 359 00 338 - -

Reported figures are based on IFRS reporting and may differ from those stated in local financial statements and taxation1 Full-time equivalent of employees (FTE) 2 Group internal net sales include only cross-boarder net sales3 Accrued income taxes include income tax recorded in the income statement excluding deferred taxes

Kesko reports the country-by-country tax information to tax authorities based on the OECD model and submits a report for each financial period by the end of the subsequent year The country-specific information given on this page to supplement our tax footprint is as applicable based on reporting to the authorities and therefore given for the year 2019

Holdings in associates impact the effective tax rate of Finnish operations The share of their net profit corresponding to Keskorsquos ownership is consolidated using the equity method while the taxes paid by associates are not included in Kesko Grouprsquos tax expense The dividends received from associates and capital gains from associates are tax-exempt income

The Swedish subsidiaries of the Group have a significant amount of tax losses from which no deferred tax assets have been recognised due to the historical loss position The formation and use of unrecognised losses have an impact on the effective tax rate of the Swedish operations

Estonian and Latvian tax systems do not impose tax on corporate profits but on profits distributed during the period Deferred tax on undistributed earnings is only recognised if a decision on the distribution of earnings is probable in the near future Consequently the difference between the theoretical tax calculated from the profit for the financial period and the tax expense accrued based on profit distribution during the period is shown in the table Country-by-country tax rate reconciliation on row ldquoEffect of unrecognised deferred taxesrdquo

Country-by-country tax rate reconciliation 2019 euro million continuing operations Finland Sweden Norway Estonia Latvia Lithuania Poland Belarus Russia ChinaProfit before tax 3951 -221 17 85 -06 106 27 69 03 02Local tax rate 200 214 220 200 200 150 190 180 200 250Tax at local tax rate1 -790 47 -04 -17 01 -16 -05 -12 -01 00

Effect of tax-free income 18 02 00 00 00 00 00 00 00 00Effect of expenses not deductible for tax purposes -13 -02 -02 00 00 -04 -01 -07 00 00Effect of unrecognised deferred taxes 95 -64 01 -20 -03 -03 05 00 00 00Effect of consolidation of share of result of associates and joint ventures 94 - - - - - - - - -Others 07 -03 01 00 00 -01 02 00 00 00Tax charge -589 -20 -05 -37 -02 -24 01 -19 00 00Effective tax rate 149 -90 285 439 -424 230 36 277 52 250

Reported figures are based on IFRS reporting and may differ from those stated in local financial statements and taxation1 The presentation of country-by-country tax rate reconciliation differs from the Group reconciliation in the 2019 consolidated financial statements for Estonia and Latvia In the country-by-country reconciliation the theoretical tax in Estonia and Latvia has been calculated at the local tax rate applied to profit distribution while in the Group reconciliation taxes on profit distribution are not taken into account when calculating theoretical tax The corresponding impact in the country-by-country tax rate reconciliation is shown on the line rdquoEffect of unrecognised deferred taxesrdquo



K-retailers and store network

AN EXTENSIVE STORE NETWORK AND ADDITIONAL SERVICES TO CUSTOMERS203-1 Keskorsquos principal business model on the Finnish market is the chain business model in which independent K-retailers run retail stores in Keskorsquos chains Retailer operations accounted for 49 of Keskorsquos net sales in 2020 At the end of 2020 Kesko had over 1100 independent K-retailer entrepreneurs as partners Together Kesko and K-retailers form K Group whose retail sales totalled euro140 billion in 2020 (0 VAT) K Group employs around 39000 people

Outside Finland Kesko mainly engages in own retailing and B2B trade B2B trade is a significant and growing part of Keskorsquos business and accounted for some 33 of Keskorsquos net sales Keskorsquos own retailing accounted for 18 of net sales

K Group has an extensive network of K-food stores in Finland There is a K-food store in most municipalities in the country Every day some 12 million customers visit K-food stores

Especially outside growth centres stores can offer services which may otherwise be scarcely available

PROGRESS MADE IN OUR RESPONSIBILITY PROGRAMME

ADDITIONAL SERVICES AT OUR STORES

OBJECTIVE PROGRESS IN 2020 PLANS FOR 2021

We provide convenient services for our customers

At the end of 2020 there were parcel and postal services at 995 K-stores Despite exceptional circumstances caused by the Covid-19 pandemic over 270 new parcel pick-up points were opened In 2020 the MobilePay mobile payment application was taken into use at nearly all K-food stores

We maintain an extensive service network and offering so that our customers have everything they need from their local store We will keep adding new parcel pick-up points in K Group stores

In 2020 the following additional services were available at K-storesbull Cashback services at all K-food storesbull Parcel and postal services at 995 storesbull Charging points for electric cars at nearly 80 stores bull 409 Rinki eco take-back points

WE COMPLY WITH ANTI-COMPETITIVE LAWS AND REGULATIONS206-1 No authority rulings or legal actions regarding anti-competitive behaviour anti-trust and monopoly practices were reported in 2020

POLITICAL CONTRIBUTIONS415-1 We do not make monetary donations to political parties

CUSTOMER PRIVACY IS OF UTMOST IMPORTANCE TO US418-1 In 2020 we received no complaints from the authorities or our customers regarding the breach of customer privacy

SOCIOECONOMIC COMPLIANCE419-1 There were no breaches of laws or regulations in the social and economic area in 2020

K-food stores in Finnish municipalities at 31 Dec 2020

units

10 stores or more 22 71

7ndash9 stores 17 55



2 stores 55 177

1 store 113 365

No K-food store 43 139

310

10 stores or more 22 units 717ndash9 stores 17 units 555ndash6 stores 20 units 653ndash4 stores 40 units 1292 stores 55 units 1771 store 113 units 365No K-food store 43 units 139

SUSTAINABILITY Graph 14

14



By providing support we increase wellbeing in society 201-1 We sponsor nationwide projects in Finland that are connected to the everyday lives of children and young

Keskorsquos community investmentseuro1000 2020 2019 2018Non-governmental environmental and other organisations 92 164 299Sports (adults) 1246 597 603Youth sports and other youth work 552 572 203Science research and education 61 36 69Culture 119 71 45Health 910 792 596Veteran organisations and national defence 19 7 22Total 3000 2238 1836


DONATIONS SPONSORING AND CHARITY CAMPAIGNS


We focus primarily on sponsoring nationwide projects in Finland that are connected to the everyday lives of children and young people promote the quality of living and sustainability and bring joy to as many people as possible

We were the main sponsor of the Finnish Cancer Foundationrsquos Pink Ribbon campaign for the sixth time and together with our customers collected nearly euro900000 in donations for the campaign

We targeted our support to help families with children during the Covid-19 pandemic and provided food aid through Me Foundation and Hope ry in Finland

As part of the cooperation between the Finnish Basketball Association and K Group we organised 24 Pirkka Little Wolves basketball events and regular basketball classes In 2020 a total of 5500 children participated in these activities

K Group is the main sponsor of the Finnish Football Association in 2021-2024 We cooperate on the national team level and with young athletes and want to do our bit in helping to share the experience of succeeding together which is a part of football with the whole nation

In the spring and autumn of 2021 we aim to organise the Pirkka Street Basket tours which were cancelled in 2020 due to the Covid-19 pandemic

people promote the quality of living and sustainability and bring joy to as many people as possible


IN THIS SECTION

Sustainability policies 17Sustainable products 20Promotion of human rights 22Purchases from Finland and other countries 23Suppliersrsquo audits and certificates 25

SELECTIONS AND PURCHASING

Our products are researched safe and responsibly produced We support local production and offer products from local producers

Most of our purchases are made from suppliers operating in Finland In global purchases we pay special attention to human rights issues and environmental impacts in our supply chains

Our sustainability policies are used for guiding the sourcing of products that contain ingredients identified as critical from a social and environmental responsibility perspective We offer an extensive selection of own brand products with responsibility labelling



We promote sustainability in our supply chains with sustainability policies suppliersrsquo factory audits sustainability training and by working in cooperation with international organisations


SUSTAINABLE SOURCING GLOBALLY

Timber and paper policy

Cotton policy

Fairtrade collaboration

Fish and shellfish

policy

Bangladesh Accord

Suppliersrsquo sustainability

training sessions

Palm oil policy

Social responsibility audits at factories

Soy policyCocoa policy

FINLANDPurchases from Finland

euro62 billionwhich is 825

of total purchases

Thank the Producer

Local Food Dates

In 2020 the purchases of goods by Kesko Grouprsquos Finnish companies totalled euro75 billion Of these purchases 825 were from suppliers operating in Finland and 175 from other countries


SUSTAINABILITY POLICIES




SUSTAINABILITY POLICIES GUIDING OUR SOURCING ndash 1 (3)

OBJECTIVE PROGRESS IN 2020

Fish and shellfish policy

Our selections do not include species on the red list of WWF Finlandrsquos Seafood Guide When making decisions concerning selections we favour sustainable stocks of fish and MSC and ASC-certified suppliers

Our fish and shellfish policy based on WWF Finlandrsquos Seafood Guide has been in effect for 12 years The retail selection of Keskorsquos grocery trade included 228 (2019 200) MSC-certified fish products and 45 (2019 30) ASC-certified products Kesprorsquos HoReCa selection had a total of 215 (2019 226) MSC-certified products and 24 (2019 25) ASC-certified products In 2020 39 (2019 5) K-food stores had fish counters with the MSC and ASC traceability certificate which promotes sustainable fishing and aquaculture

Palm oil policy

By 2020 the palm oil in our own brand groceries will be 100 sustainably produced (CSPO)

100 (2019 100) of the palm oil in Pirkka and K-Menu food products sold in 2020 was sustainably produced (CSPO) of which 344 was Segregated 598 Mass Balance and 58 RSPO Credits 100 (2019 100) of the palm oil in Kespro Menu food products sold in 2020 was sustainably produced (CSPO) of which 01 was Identity Preserved 882 Segregated 103 Mass Balance and 14 RSPO Credits

Soy policy By 2020 the ingredients of soy origin in the grocery tradersquos own brand food products and the soy fodder used in the production of products of animal origin will be 100 sustainably produced and be RTRS ProTerra or Fairtrade certified

100 (2019 100) of the soy used as an ingredient in Pirkka and K-Menu food products sold in 2020 was sustainably produced soy of which almost one tenth was ProTerra certified and the rest RTRS credited 100 (2019 100) of the soy used as an ingredient in Kespro Menu food products sold in 2020 was sustainably produced soy of which almost one tenth was RTRS ProTerra or Fairtrade certified and the rest RTRS credited In 2020 approximately two thirds of the soy fodder used for the production of products of animal origin in Pirkka K-Menu and Menu foods were within the scope of the producersrsquo own certification procedures For the remaining one third we acquired the RTRS credits ourselves






By 2025 timber and paper products in Keskorsquos product range will be 100 of sustainable origin FSC or PEFC-certified or made of recycled materials In the grocery trade the policy applies to our own brand products In the building and technical trade the policy concerns all timber delivered by Kesko

Keskorsquos building and technical trade has been awarded the PEFC certificate which covers sawn pine and spruce timber and processed timber as well as the wholesale distribution of MDF boards in Finland (percentage-based method) The average PEFC certification percentage in 2020 was 883 (2019 889) for pine and 820 (2019 834) for spruce Of the timber and paper products in the grocery tradersquos Pirkka and K-Menu ranges 36 (2019 24) contained sustainable raw material of which 61 were FSC-certified 36 PEFC-certified and 3 of recycled materials In Kesprorsquos Menu range 67 (2019 31) of timber and paper products contained sustainable raw material of which 73 were FSC-certified and 27 PEFC-certified

Plastics policy

By the end of 2025 all packaging used in our own brand products will be recyclable reusable or biodegradable Our objective is to reduce the amount of plastic contained in the packaging of our own brand products by 20 by the end of 2025

By the end of 2020 we had reduced plastic in the packaging of our own brand products in Keskorsquos grocery trade by 8 from the 2019 level In 2020 we reduced plastics by a total of 214 tonnes

The measures taken in 2020 are discussed further in the Climate and environment section

Packaging policy

We avoid using excess packaging material and reduce the use of plastic in our packaging Our packaging must be recyclable compostable or reusable We favour renewable packaging materials paperboard paper cardboard or bio-based plastics In our wood-based packages we favour solutions of sustainable origin (FSC or PEFC-certified) or recyclable materials

In 2020 we made changes to the packaging of a total of 77 own brand products in compliance with our packaging and plastics policies






SUSTAINABILITY POLICIES GUIDING OUR SOURCING ndash 3


Animal welfare policy

When making decisions concerning selections we take the well-being of farmed animals into account From the start of 2026 we will no longer accept eggs from furnished cages into Keskorsquos selections

In 2020 we sold some 250 million eggs of which 54 (2019 57) were furnished cage eggs and 46 (2019 43) were barn eggs organic and free-range eggs

Cocoa policy

By the end of 2020 all the cocoa used in Keskorsquos own brand cocoa drinks chocolate confectionery products and chocolate baking products will be of sustainable origin The cocoa used in other own brand products containing cocoa will be 100 of sustainable origin by the end of 2025

100 (2019 78) of the Pirkka and K-Menu cocoa drinks chocolate confectionery products and chocolate baking products sold in 2020 contained sustainable cocoa Of the products containing sustainable cocoa 89 were UTZ-certified and 11 Fairtrade certified The Kespro Menu Fairtrade cocoa drink powder was 100 (2019 100) of sustainable origin

Cotton policy

All of the cotton sourced for our own clothing and home textile brands will be more sustainable cotton by the end of 2025 Our own brand clothing and home textiles include K-Citymarketrsquos mywear clothes and myhome home textiles Pirkka socks and K-Rautarsquos PROF workwear and Cello interior textiles More sustainable cotton is certified organic cotton recycled cotton Better Cotton or Fairtrade cotton

We published our cotton policy in March 2020 and set a target for increasing the use of more sustainable cotton in our own brand clothing and home textiles Kesko has been a member of the Better Cotton Initiative (BCI) since March 2020 The Better Cotton Initiative exists to make global cotton production better for the people who produce it the environment it grows in and the sectorrsquos future In 2020 48 of the cotton sourced for our own clothing and home textile brands was more sustainable cotton


Read more about sustainable products


SUSTAINABLE PRODUCTS

GROCERY TRADEbull Products compliant with Keskorsquos sustainability policiesbull Products with sustainability certification and labellingbull Plant-based productsbull Circular economy products

BUILDING AND TECHNICAL TRADEbull Products reducing energy and emissions bull Renewable energy supply and distribution products bull Sustainably produced timber and wood productsbull Products enabling a healthy and sustainable indoor

environment

CAR TRADEbull Vehicles with low and zero CO2 emissionsbull Reconditioned parts offered in aftersales

businessbull Renewable electricity to charge hybrid and

electric cars at K Charge stations

in 2019 we initiated extensive work to identify the products in each division that are sustainable from a climate perspective We defined sustainable products as those which have a significantly smaller climate impact than comparable products or which are important for adapting to climate change Our next goal is to report and monitor the sales of sustainable products


We encourage our customers to increase their use of vegetables In 2017 we joined the nutrition commitment by making a vegetable commitment which encourages our customers to increase their use of vegetables through the following actions which extend to the year 2020 bull We set a target that by 2020 at least 400 K-food stores

will have dedicated lsquoveggie shelvesrsquo for plant protein products The goal was reached in 2018 Today plant protein products are part of the chain selections of all our grocery store chains

bull We will organise at least 250 vegetable-related campaigns at K-food stores each year (2018ndash2020) In 2020 we organised 313 (2019 279) vegetable-related campaigns with 1209 vegetable products (2019 1267)

bull We will add at least 50 new fruit or vegetable products to our selections by 2020 In 2020 we added 37 (2019 73) new fruit and vegetable products to our selections During the three previous years we added a total of 152 new fruit and vegetable products to our selections



OWN BRAND PRODUCTS WITH RESPONSIBILITY LABELLING


We offer an extensive selection of own brandproducts with responsibility labelling

The grocery tradersquos Pirkka and K-Menu selections bull 384 (2019 309) Hyvaumlauml Suomesta (Produce of

Finland) products bull 209 (183) products with the Key Flag symbol bull 152 (201) organic products bull 89 (84) Seed leaf label products bull 154 (97) Nordic Swan label products bull 4 (-) EU Ecolabel productsbull 23 (27) Fairtrade products bull 67 (52) UTZ-certified products bull 45 (40) MSC-certified fish products bull 8 (4) ASC-certified fish productsbull 9 (9) products with the Finnish allergy label

(Allergiatunnus)

Kesprorsquos Menu selectionbull 32 (4) Hyvaumlauml Suomesta (Produce of Finland)

productsbull 43 (35) products with the Key Flag symbol bull 12 (10) organic products bull 29 (24) Seed leaf label products bull 29 (25) Nordic Swan label products bull 6 (4) Fairtrade products bull 11 (11) UTZ-certified products bull 34 (41) MSC-certified products bull 3 (3) ASC-certified products bull 1 (1) product with the Finnish allergy label

(Allergiatunnus)

The building and technical tradersquos Cello Prof FXA GOODIY and Onnline selections bull 1159 (1027) products with the Key Flag

symbol bull 30 (30) Nordic Swan label products bull 278 (267) products with the Finnish allergy

label (Allergiatunnus) bull 130 (61) M1-certified products


Efforts to promote human rights 412-1 412-2 In compliance with its human rights commitment Kesko respects all internationally recognised human rights Our sourcing operations are guided by Keskorsquos ethical purchasing principles which are based on the Declaration on Fundamental Principles and Rights at Work of the International Labour Organization (ILO) the Universal Declaration of Human Rights and the UN Convention on the Rights of the Child In 2016 Kesko published its statement of commitment on human rights and impact assessment in compliance with the UNrsquos Guiding Principles on Business and Human Rights The human rights assessment is reviewed every three years by the responsibility management group with the latest review conducted in autumn 2019

As part of the human rights assessment in 2016 we conducted a human rights review at factories in the high-risk countries of China India Bangladesh and the Philippines in cooperation with the Trade Union Solidarity Centre of Finland SASK In 2017 we carried out an investigation with SASK into the realisation of human rights in the supply chains of grapes in Brazil India and South America In 2018 we conducted an extensive survey on the water risks related to our own avocado purchases

Our K Code of Conduct guidelines include a section on human rights One of the themes in the refresher eLearning programme on the K Code of Conduct targeted at the entire personnel is non-discrimination A total of 5221 employees had completed the refresher eLearning programme by

the end of 2020 Awareness of the K Code of Conduct is regularly promoted through communications and K Code of Conduct training sessions According to Group guidelines a K Code of Conduct contract clause must be added to all agreements under which the Kesko Group companies purchase products or services from outside the Group

Kesko has an Employee Equality and Diversity Group in accordance with the non-discrimination plan The working group includes representatives of the employer personnel and labour protection functions and handles matters related to non-discrimination and equality within the Group Based on the working grouprsquos initiative we drafted guidelines in 2020 on how to react when a customer or a member of the working community speaks in a racist or otherwise derogatory manner In 2020 we acted as one of the key partners in the Suitable Work for All project organised by the Finnish Association of People with Physical Disabilities and were involved in various events related to the project

In 2020 we prepared a programme for diversity and inclusion Based on stakeholder hearings we outlined the main goals and potential development activities of our programme to build a more diverse and inclusive K Group

Regular training sessions in responsible purchasing discuss the implementation of human rights in global supply chains The training sessions discuss the sustainability policies guiding sourcing the assurance process in purchasing from high-risk countries the amfori BSCI Code of Conduct principles and the social responsibility assessment systems approved by Kesko Due to the Covid-19 pandemic we were only able to organise one training event for those working in Kesprorsquos purchasing in 2020

22KESKOrsquoS YEAR 2020 I SuStainability 22


Purchases from Finland and other countries

THE MAJORITY OF PURCHASES ARE FROM FINNISH SUPPLIERS 204-1 Most of the economic benefit generated by Keskorsquos operations flows to suppliers of goods Purchasing local products and services creates economic benefits for Keskorsquos home country and promotes local work

Kesko assesses the economic benefit it generates by reporting its purchases by operating country and each companyrsquos country of domicile Kesko also reports both Keskorsquos and K-retailersrsquo direct purchases of goods in Finland by region

Most of the economic benefit generated by Keskorsquos operations ndash some 83 of Keskorsquos net sales ndash flows to suppliers of goods purchases from which were valued at euro85 billion in 2020 The purchases of all Kesko companies from suppliers operating in Finland totalled euro62 billion or 734 (2019 653) of the Grouprsquos total purchases

In 2020 Kesko had some 20400 suppliers and service providers from whom purchases were valued at a minimum of euro1000 during the year Of these some 9500 operated in Finland 8500 in Keskorsquos other operating countries and 2300 elsewhere

The ten largest suppliers accounted for 221 (2019 215) of the Grouprsquos purchases of goods and the 100 largest suppliers for 501 (2019 489) Of the ten largest suppliers seven were Finnish food industry companies two

Keskorsquos purchases by operating country in 2020

Suppliers of goods and services in

operating countryPurchases from

suppliers of goods


other operating countries

Purchases from suppliers of goods

number euro million number euro million

Finland 9340 6186 825 2316 1309 175Sweden 3396 311 912 251 30 88Norway 1941 338 986 157 5 14Estonia 512 14 378 260 23 622Latvia 425 10 398 252 15 602Lithuania 369 10 365 167 17 635Poland 970 180 966 57 6 34Total 16953 7048 834 3460 1405 166

Kesko Senukai companies excluded from the table above

Keskorsquos purchases by companyrsquos and supplierrsquos country of domicile in 2020Supplierrsquos country of domicile

Companyrsquos country of domicile Finland Sweden Norway Estonia Latvia Lithuania Poland Belarus

Other countries Total

Finland 6186 192 12 36 5 12 31 8 1013 7495Sweden 9 311 4 4 - 0 1 - 12 341Norway 0 4 338 - - - - - 0 343Estonia 6 1 0 14 1 1 2 - 13 37Latvia 2 0 0 0 10 0 1 - 10 24Lithuania 3 0 0 1 0 10 2 - 11 27Poland 0 0 0 0 0 0 180 0 5 186Total 6206 510 354 55 15 23 217 8 1064 8453





LOCAL PRODUCTION


We support local producers K-retailersrsquo direct purchases from Finnish regions totalled euro5804 million In 2015-2020 products sold under the lsquoThank the Producerrsquo model had accrued a total of more than euro48 million in additional money for farmers

To support Finnish work we are participating in the Teet hyvaumlauml ostamalla suomalaista and Rakennat hyvaumlauml ostamalla suomalaista (ldquoYou do good you build good by buying Finnish productsrdquo) campaign which is a continuation of the 2020 campaign named Ole osa hyvaumln ketjua (ldquoBe part of a chain of goodrdquo)

import companies operating in Finland and one German car manufacturer

The purchases of goods by Kesko Grouprsquos Finnish companies totalled euro75 billion Of these purchases 825 were from suppliers operating in Finland and 175 from other countries Some of the suppliers operating in Finland are import companies and reliable statistics cannot be compiled on the origin of goods supplied by them

WE SUPPORT FINNISH WORK AND PRODUCTION Finnish food producers play a key role in K Grouprsquos grocery trade We want to promote the success of Finnish small food producers and accelerate the journey of local products to store shelves During the Covid-19 pandemic supporting small food producers is considered to be even more important K-food stores are important trading partners for small food producers as local K-retailers can buy products directly from the producers for their store selections

Finnish products are always primarily selected for K Grouprsquos own Pirkka range provided that the quality and price criteria are met Pirkka product groups that are 100 Finnish include milks and milk drinks fresh meat products and eggs for example Pirkka is a significant employer in Finland because Pirkka products are manufactured in nearly 200 companies across the country Pirkka offers many small companies in Finland an opportunity to have their products sold nationwide and to increase their production in a controlled manner

The lsquoThank the Producerrsquo operating model is one of the ways in which K Group supports Finnish agriculture The purpose of the operating model is to increase the publicrsquos appreciation for Finnish food and its producers The operating model involves 28 partners and nearly 100 products Under the operating model the consumer price may be slightly higher for the products which enables K Group to pay an additional payment to the producers

The additional sum is paid directly to the producers In 2015-2020 products sold under the lsquoThank the Producerrsquo model accrued a total of more than euro48 million in additional money for farmers

In spring 2020 K Grouprsquos grocery division K-Rauta the Association for Finnish Work and more than 150 food product and home and speciality goods companies launched together with Finfood - Finnish Food Information and Kotimaiset kasvikset ry the Ole osa hyvaumln ketjua campaign (ldquoBe part of a chain of goodrdquo) to promote the important role of all parties ie traders suppliers producers consumers and buyers in supporting Finnish work

In 2020 the Covid-19 pandemic strengthened appreciation for domestic products in Finland which was reflected in the growing sales of products with a mark of origin products with the Hyvaumlauml Suomesta (Produced in Finland) label Avainlippu (Key Flag) products and Sirkkalehti products in the grocery trade and in the growing sales of domestic products in the building and home improvement trade

K Group has made the path of local food to store shelves smoother for years through the Local Food Date events held across Finland Organised by K Group and Finfood ndash Finnish Food Information these events bring together K-retailers and small food producers No Local Food Date events were organised in 2020 due to the Covid-19 pandemic


Direct imports to Finland (euro million) Valid audits

1 CIF direct imports to Finland forwarded by Kesko Logistics and Onninen Finland only excluding imports by K-Auto

Belarus euro76 million 1 audit

Turkey euro40 million 8 audits

China euro521 million 348 audits

Thailand euro96 million 19 audits

Vietnam euro27 million 22 auditsGreece

euro60 million 8 audits

Russia euro15 million 0 audits

Bangladesh euro30 million 10 audits

India euro89 million 37 audits

Value of Keskos direct imports and number of social responsibility audits 10 largest risk countries of import1

Indonesia euro14 million 2 audits


Efforts to promote transparency in global supply chains 414-1 414-2 Kesko pays special attention to human rights issues and working conditions in its supply chain in countries with the greatest risk of human rights violations In the risk assessment of supply countries we utilise the amfori Country Risk Classification based on Worldwide Governance indicators published by the World Bank

In 2020 direct purchases from suppliers in high-risk countries totalled euro105 million (2019 euro104 million) and accounted for approximately 12 (2019 11) of Keskorsquos total purchases Direct imports from high-risk countries accounted for some 136 (2019 139) of Keskorsquos total imports to Finland The figures concern direct purchases in Finland no statistics are available on direct imports from high-risk countries in Keskorsquos other operating countries

We publish a list of the manufacturers of clothes accessories shoes and bags of our own brands and own imports located in high-risk countries and the addresses of the factories annually on our website to improve the transparency of our supply chain

Suppliersrsquo audits and certificates

Social responsibility audits of suppliers in high-risk countries Kesko is a member of amfori an association dedicated to promoting sustainable trade We improve the social performance of our supply chain via amfori BSCI Kesko utilises global social responsibility audit and certification

systems primarily amfori BSCI audits in the assessment of suppliers in high-risk countries Kesko is committed to promoting compliance with the amfori BSCI Code of Conduct in its supply chain According to Group guidelines an amfori BSCI Code of Conduct contract clause must be added to supplier agreements

We also accept other assessment systems of social responsibility if their criteria correspond to those of amfori BSCI auditing and if the audit is conducted by an independent party As part of the sourcing cooperation between Keskorsquos grocery trade and ICA Global Sourcing Kesko also accepts the ICA Social Audit In this case

however suppliers are required to adopt a third-party audit approved by Kesko after a maximum of two ICA Social Audits

Our principle in high-risk countries is to collaborate only with suppliers that are already included in the scope of social responsibility audits or that start the process when the cooperation begins Keskorsquos grocery trade and building and technical trade require all of their suppliers in high-risk countries to have an approved audit when the cooperation begins



Some of Keskorsquos suppliers are also members of amfori and thus promote amfori BSCI audits in their own supply chains

Results of amfori bSCi audits In 2020 a total of 210 (2019 180) of the factories or plantations of Keskorsquos suppliers underwent full amfori BSCI audits In addition 117 (2019 172) factories or plantations of suppliers underwent amfori BSCI follow-up audits In spring 2020 because of the Covid-19 pandemic the validity period of amfori BSCI audits was extended by three months

The results of the 2020 amfori BSCI audits of Keskorsquos suppliersrsquo factories and farms are shown on page 27 The majority of the deficiencies occurred in matters related to working hours social management systems and workersrsquo involvement and protection Corrective actions and monitoring are included in the audit process

In accordance with the amfori BSCI operating model a full audit is conducted at factories every two years to assess every field of the auditing protocol If a factory receives an audit result of C D or E a follow-up audit within 12 months must be arranged to assess the deficiencies identified in the full audit and the corrective measures implemented

Kesko does not terminate cooperation with a supplier that undertakes to resolve the grievances specified in the audit report In 2020 we were obligated to terminate cooperation with six (2019 9) factories because a consensus could not be reached with the factories regarding necessary corrective measures


SUPPLY CHAIN


The social responsibility of the production of own direct imports from high-risk countries has been assured

A total of 210 (2019 180) of Keskorsquos suppliersrsquo factories or plantations in high-risk countries underwent full amfori BSCI audits In addition 117 (2019 172) suppliersrsquo factories or plantations underwent amfori BSCI follow-up audits At the beginning of 2020 Keskorsquos suppliers in high-risk countries had a total of 613 (2019 733) valid social responsibility audits

We assure the responsibility of the ingredients (Tier 2ndash3) of our own brand Pirkka and K-Menu food products

In 2015ndash2018 we conducted an investigation and risk analysis of the origin of the ingredients of more than 2000 Pirkka and K-Menu own brand food products In 2019 we adjusted the risk analysis of the ingredients and concentrated on the primary ingredients of Pirkka and K-Menu food products originating from high-risk countries

Social responsibility audits and certifications of suppliers in high-risk countriesSocial responsibility assessment system 1 Jan 2021 total 1 Jan 2020 totalamfori BSCI 339 347SMETA 115 177SIZA 59 100SA8000 16 15Fairtrade 29 28Rainforest Alliance 20 22Fair for Life 2 4For Life 14 10ICA Social Audit 12 22ICTI 6 8WRAP 1 0



A Outstanding

B GoodC AcceptableD InsufficientE Unacceptable

Morendashless

If the supplier underwent more than one amfori BSCI audit during 2020 the results of the latest audit only are presented

Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable

Social Management System and Cascade Effect 4 12 12 71 1

Workers Involvement and Protection 52 30 18

The Rights of Freedom of Association and Collective Bargaining 98 2

No Discrimination 94 5 1

Fair Remuneration 42 51 7

Decent Working Hours 17 6 77

Occupational Health and Safety 68 24 1 6 1

No Child Labour 100

Special Protection of Young Workers 100

No Precarious Employment 92 7 1

No Bonded Labour 99 1

Protection of the Environment 78 12 10

Ethical Business Behaviour 86 14

Follow-up audits

Social Management System and Cascade Effect 2 8 7 83

Workers Involvement and Protection 55 28 16 1



Fair Remuneration 38 57 4 1

Decent Working Hours 9 3 86 2


No Child Labour 100


No Precarious Employment 95 5

No Bonded Labour 100


Ethical Business Behaviour 96 3 1

amfori bSCi audit results by area in 2020

amfori BSCI results in 2020 full audits

kpl

Outstanding (A) 8 4 xx

Good (B) 18 9 xx

Acceptable (C) 172 85 xx

Insufficient (D) 5 2 xx

Unacceptable (E) 0 xx

203

Outstanding (A) 4Good (B) 9Acceptable (C) 85Insufficient (D) 2Unacceptable (E) 0


16

amfori BSCI results in 2020 follow-up audits

kpl

Outstanding (A) 4 3 x

Good (B) 3 3 x

Acceptable (C) 106 92 x

Insufficient (D) 2 2 x

Unacceptable (E) 0 x

115



17



Suppliersrsquo sustainability trainingIncreasing suppliersrsquo awareness of sustainability is important for promoting social responsibility in our supply chains We annually organise sustainability training sessions for goods suppliers both in-house and through our partners In 2020 due to the Covid-19 pandemic we were unable to organise as much training as usual

In 2020 as part of the ICA Global Sourcing (IGS) purchasing cooperation Kesko and IGS organised ten training sessions for suppliers from high-risk countries on BSCI requirements and three sessions on BEPI requirements

bangladesh accordKesko is a member of the Bangladesh Accord The purpose of the Accord on Fire and Building Safety in Bangladesh agreement is to improve electric fire and building safety in ready-made garment factories in Bangladesh through inspection training and corrective measures Kesko requires the ready-made garment factories in Bangladesh that produce for K-Citymarketrsquos mywear brand to be included in the Accord process In 2020 five (2019 6) ready-made garment factories in Bangladesh producing for K-Citymarketrsquos mywear brand were included in the Accord process

Fairtrade premiums help develop local communitiesKeskorsquos grocery trade selections have included Fairtrade products since 1999 In 2020 the retail selection of Keskorsquos grocery trade included 260 Fairtrade products 23 of which were Pirkka products (2019 27) Kesprorsquos selection had a total of 91 Fairtrade products 4 of which were Menu products (2019 4) In 2009ndash2020 a total of more than euro6 million was generated as Fairtrade premiums for social development projects in local communities from Fairtrade products sold by K-food stores In 2020 a total Fairtrade premium of euro935784 was generated by products sold by K-food stores and Kespro (2019 euro964807)

The products generating the largest Fairtrade premiums were Fairtrade flowers ice cream and bananas The Fairtrade premiums have been used for example for the renovation and extension of a school and a day care centre and for purchasing kitchen supplies in the local communities

Fairtrade premiums are also used for example at the Oserian flower farm to grant scholarships to students for upper secondary school and higher education The Oserian flower farm has contributed to the construction of the Naivasha maternity hospital The Oserian Fairtrade Premium Committee covers the cost of employeesrsquo and their familiesrsquo hospital care in addition to maintaining an around-the-clock ambulance service Part of the farm is located in a nature reserve

SUPPLIERSrsquo ENVIRONMENTAL ASSESSMENT308-1 In 2020 we joined the CDP Supply Chain programme and challenge our suppliers to cut their emissions We ask our suppliers annually to report on their climate targets and measures through CDPrsquos Climate Change questionnaire

In 2020 KOPO (Kesko Onninen Purchasing Office) the purchasing office of the building and technical trade divison in Shanghai carried out an audit on 54 suppliers with a focus on environmental management and the ISO 14001 environmental system At the end of 2020 50 suppliers had a valid ISO 14001 certification

As part of the IGS (ICA Global Sourcing) purchasing cooperation we have introduced the IGS Environmental Assessment in which we ask suppliers for information on their energy consumption and sources and their measures taken to reduce energy consumption In 2020 an IGS Environmental Assessment was carried out on 11 suppliers

We participate in the amfori BEPI programme which aims to develop environmental management of suppliers in risk countries At the end of 2020 19 of our suppliers in risk countries participated in the amfori BEPI process One supplier had passed the BEPI assessment carried out by a third party


TRACE THE ORIGIN OF PRODUCTS

Companies are expected to provide even more open information on where their products come from how working conditions at factories and premises are monitored and how the environmental impact of products is minimised

To improve transparency in our supply chains we launched the Tracing Our Products website in autumn 2020 where we provide information on the origin of products and their journey to the shelves of K-stores

The website initially provides information on the origin of all Pirkka and K-Menu tuna and Pirkka Fairtrade roses and their journey to the shelves of K-stores Of Finnish products we first provide information on the journey of PROF Timber products from the forest to sawmills and then on to K-Rauta stores We aim to add information to the website on products that our customers and stakeholders are particularly interested in

The products on the Tracing Our Products website are K Grouprsquos own brand products We will select products that face challenges regarding the sustainable production of raw materials and whose purchasing is steered by K Grouprsquos sustainability policies

Read more keskofiproducttracing



WE CARE FOR THE HEALTH AND SAFETY OF OUR CUSTOMERS416-1 416-2 The activities of our Quality and Product Development Unit include assessing the impacts of products on health and safety Manufacturers of our own brand food products must have international certifications that assure product safety The standards we approve include BRC IFS FSSC 22000 and GlobalGAP In 2020 the total number of certified suppliers was 517 (2019 605)

We analysed 6440 (2019 7405) product samples Almost 4000 of the samples were related to the product development of our own brands A total of 2113 own control samples were analysed (2019 2478)

As proposed in The EC White Paper on Nutrition Overweight and Obesity-related Health Issues sugar saturated fat and salt were reduced in more than 150 Pirkka products during the period 2007ndash2013 The health aspects of new Pirkka products are taken into account at the product development stage

The National Nutrition Council of Finland published its nutrition commitment operating model in 2017 The nutrition commitment is the Finnish contribution to the EU Roadmap for Action on Food Product Improvement frameworkrsquos reformulation programme

In 2020 an extensive product safety risk assessment was made on own brand products in the building and technical

trade The assessment covers all product categories which have own brand products

We monitor product safetyWe take measures against food fraud in accordance with the VACCP plan (Vulnerability Assessment and Critical Control Points) The VACCP plan contains an assessment of the probability of encountering food fraud and a monitoring plan to protect us against such fraud Product groups identified as critical control points are not only subjected to normal product and supplier controls but also regular analytic monitoring to detect any frauds

In 2020 we made 165 product recalls in the grocery trade (2019 156) Of these 42 concerned our own brand products (2019 39) In other cases our Quality and Product Development Unit assisted the product manufacturers in the recall If a defect or error in a product might have health impacts a public recall is carried out In 2020 this happened six times for our own brand products (2019 2)

In the building and technical trade we made two recalls in K-Rauta in 2020 (2019 7) No recalls were made in Onninen in 2020 (2019 1)

A vehicle manufacturer must launch a recall campaign if a serious error or deviation that needs repairing is detected in one of their models or a part thereof A serious error

or deviation is one that poses a hazard to road safety or significant harm to the environment or health As a rule this kind of fault or defect would result in a rejection in a vehicle inspection

In 2020 a total of 47 recall campaigns were launched for brands represented by K-Auto (Volkswagen passenger cars and commercial vehicles Audi SEAT CUPRA Porsche and MAN) (2019 57)

There were no legal proceedings or fines associated with product safety or health in Kesko in 2020

MARKETING COMMUNICATIONS AND PRODUCT INFORMATION Package labelling helps consumers in making responsible choices417-1 We comply with all relevant legislation on the product labelling of our own brand products and imports Key regulations includebull Food product labelling EU Food Information Regulation

(EU) No 11692011 and supplementary provisionsbull Product labelling related to safe use of consumer goods

Directive 200195EC on general product safety (and related corresponding national legislation in Keskorsquos operating countries)

bull Warning labelling for chemicals CLP regulation EC 12722008 on the classification labelling and packaging of chemicals

More about our Covid-19 measures keskoficoronavirus



bull Labelling for electrical equipment various product segment specific directives (and related corresponding national legislation in Keskorsquos operating countries)

bull Toy labelling Directive 200948EC on toy safety (and related corresponding national legislation in Keskorsquos operating countries)

bull Package labelling for cosmetics Regulation EC 12232009 on cosmetic products

We indicate the name and location of the manufacturer on all Finnish Pirkka products and on all K-Menu products On foreign Pirkka products we indicate the country of manufacture On all own brand products of K-Citymarket and Keskorsquos building and technical trade we indicate the country of origin

We disclose the country of origin of meat in accordance with regulation EU No 13372013 We label meat and dairy as ingredients in accordance with the national decree MMM 2182017 We will state the origin of the main ingredient in our own brand food products in accordance with the Commission Implementing Regulation (EU) 2018775 The regulation has been applied since 1 April 2020 As this packaging renewal concerns some 3200 products it is still partially underway

In addition to statutory package labelling we add voluntary labelling to our brand products to inform the consumer of matters related to product responsibility Such labelling may

include organic labels and ecolabelling as well as labelling indicating social responsibility

We add material symbols on the packaging of own brand products of Keskorsquos grocery trade In 2020 we continued to add written recycling instructions on our product packaging These instructions will be added to all packaging to make it easier for consumers to sort their packaging waste correctly

We add warning labelling of chemicals that are hazardous to the environment in accordance with the CLP regulation

if a product has faulty labelling we will withdraw it from sales417-2 In 2020 there were 9 product recalls of Keskorsquos own brand products resulting from defective product labelling (2019 4)

We observe good marketing manners417-3 In 2020 no advertising carried out by Kesko or its subsidiaries was subject to processing by the Council of Ethics in Advertising and there were no violations of the law or any other violations of voluntary principles in Keskorsquos operations

Responsible sales of alcohol and tobaccoThe Finnish law allows us to sell alcohol drinks with a maximum of 55 alcohol by volume and tobacco products The sales require a store-specific licence The law prohibits selling these products to people under 18 years of age

We verify the age of all customers who purchase alcohol or tobacco and appear younger than 30 This way we aim to ensure that no alcohol or tobacco is sold to minors In 2020 our cashiers verified the age of 2812016 (2019 3252195) customers purchasing alcohol and 1429342 (2019 1711473) customers purchasing tobacco Based on these checks we had to decline 15949 alcohol purchases (2019 24854) and 9252 tobacco purchases (2019 15657)

Our cashiers must participate in training on age limits and take a test on the topic The age limit training consists of basic information on age limits for sales and descriptions and rehearsals of various situations After passing the final test the cashier earns a certificate called an lsquoage limit passportrsquo



WE PROMOTE THE FOLLOWING UN SUSTAINABILITY GOALS

in 2020 the first two all-electric trucks were introduced for deliveries in the Helsinki region


IN THIS SECTION

Carbon Neutral K Group 2025 33Renewable energy and energy efficiency 37Emissions 40Water 45Biodiversity 46Circular economy and waste management 50Food waste 53

CLIMATE AND ENVIRONMENTWe are committed to the goals of the Paris Agreement to mitigate climate change K Group is striving to become carbon neutral by 2025 and reduce emissions to reach zero emissions from our own operations and transports by 2030

We reduce emissions by increasing the use of renewable energy and by improving our energy efficiency

We promote the sustainable use of natural resources in our supply chains

We reduce food waste in cooperation with the food supply chain from primary production to the store

We encourage our customers and partners to reduce their own environmental impacts

32KESKOrsquoS yEaR 2020 i SuStainability

Carbon neutral K Group 2025All K Group divisions have the opportunity to offer customers solutions for reducing their climate impacts since the biggest sources of greenhouse gas emissions in private consumption are housing food and mobility

K Group aims to be carbon neutral in 2025 We will systematically reduce emissions so that our own operations and transports are emission-free by 2030 In between 2025 and 2030 we will offset our remaining emissions Our objective is to eventually have no need for offsets and make our own operations emission-free by 2030

The biggest emissions from Keskorsquos own operations are related to electricity and heat used in properties and fuel consumption in logistics transports The primary means to achieve zero emissions include increased use of electricity and heat produced with renewable energy and switching to biofuels in transports in Finland

All electricity purchased by Kesko for K-stores and other Kesko properties in Finland has been produced with renewable energy since 2017 Our objective now is to increase the share of electricity and heat produced with renewable energy in our other operating countries and in energy purchases made by the retailers

In 2020 we made progress towards a carbon neutral K Group through many measures Around 20 K-food stores are already equipped with our ingenious heat circulation

system The first two all-electric trucks were introduced for deliveries in the Helsinki region

K Group also encourages its suppliers the whole supply chain and its customers to take measures to reduce emissions

Our objective is to have emission reduction targets set by 2025 for two-thirds of direct supplier emissions In 2020 we joined the CDP Supply Chain programme and challenged our suppliers to reduce their emissions

On social media and in marketing we encourage our partners and customers to participate in climate actions for example with the help of our Cursing Carbon character which helps us communicate to our customers our actions related to carbon footprint and mitigating climate change and encourages our customers to make more climate friendly choices The role of Cursing Carbon is to make a serious and difficult topic interesting and easy to approach for K Grouprsquos customers

In 2020 we were involved in the Opinkirjo partnership in which we produced educational material on climate change for use in secondary schools

K GROUP AIMS TO BE CARBON NEUTRAL IN 2025



TOWARDS A CARBON NEUTRAL K GROUP

bull two all-electric trucksbull Seven new solar power

plants 42 in totalbull ingenious heat circulation

systembull updating refrigeration

equipment to environmentally friendly refrigerants

bull a ldquocarbon neutral grocery storerdquo operating model

bull Emissions reduction targets for suppliers CDP Supply Chain programme

bull District heat with low emissionsbull utilising ai in analysing energy

consumption data bull led lamps in store lighting bull Switching to biofuels in transports more

electric trucksbull Obtaining wind power from a new wind

farm in Finlandbull 100 renewable electricity also in

operating countries outside Finland

Emission-freeReducing emissions Reducing and offsetting emissions

From 2025 onwards we will offset the remaining emissions from our

own operations

Emis

sion

s fr

om o

wn

oper

atio

ns

We will achieve zero emissions in our own operations by 2030

K Group aims for carbon neutrality by 2025 We will systematically reduce emissions from our own operations reaching zero emissions from our own operations by 2030

2025 20302020



CARBON NEUTRAL GROCERY STORES In 2019 K Group together with Natural Resources Institute Finland (Luke) developed a model which enables a grocery store to become carbon neutral The model has been piloted in three K-food stores Based on their experiences the aim is to expand the model to other K-food stores The carbon neutral store operating model defines the carbon footprint of the storersquos own activities and its footprint reduction target The aim is to identify and implement actions to reduce the carbon footprint of the store and then calculate the necessary amount of offsets Our goal is that stores will have less and less need for offsets in the future

CARBON FOOTPRINT CALCULATOR IN THE K-OSTOKSET SERVICEOur data-based K-Ostokset service allows users to track how much Finnish food they are buying and has a carbon footprint calculator which provides information on the carbon footprint of a customerrsquos shopping basket at the product category level The servicersquos new Nutrition section allows customers to monitor their consumption of sugar salt red meat fish and vegetables This way they can compare their own data with the national nutrition recommendations and set goals for their consumption



K GROUPrsquoS CLIMATE IMPACTS

K Grouprsquos most significant climate impacts originate from emissions in Keskorsquos own operations and the value chain of products

EMISSIONS FROM PRODUCTION OF PRODUCTS SOLD

5900000 tCO2e

the highest emissions are generated during the lifecycle of products and services sold by us We challenge our suppliers and the whole

supply chain to reduce emissions

EMISSIONS FROM USE AND END-OF-LIFE TREATMENT OF

PRODUCTS SOLD

1600000tCO2e

EMISSIONS FROM KESKOrsquoS OWN OPERATIONS

89000 tCO2e

all our divisions offer customers solutions for reducing climate impacts We encourage our

customers to make sustainable choices

Emissions from Keskorsquos own operations are related to electricity and heat

used in properties and fuel consumption in logistics transports



Renewable energy and energy efficiencyWe participate in mitigating climate change by increasing renewable energy purchases and our own production and increasing energy efficiency We aim to achieve a 10 increase in energy efficiency by 2023

RENEWABLE ELECTRICITY 302-1 All electricity purchased by Kesko for use in K-stores and other Kesko properties in Finland has been produced with renewable energy

In 2020 we purchased a total of 552 GWh of Renewable Energy Guarantees of Origin (REGO) This renewable electricity was purchased from the Nordic countries and 78 of it was produced by hydroelectric power and 22 by bioenergy About 473 GWh of the renewable electricity was provided by Keskorsquos electricity purchasing company Ankkuri-Energia Oy The remainder of the renewable electricity was purchased elsewhere by the retailers and used by Kesko

In addition the electricity used by K Charge stations is produced with Finnish wind power

Energy consumption of properties in Finland At the end of 2020 properties managed by Kesko in Finland (owned and leased) included offices warehouses and 1228 store sites The most significant properties in terms of energy consumption include K-Citymarkets K-Supermarkets and large wholesale and storage buildings

The majority of properties used district heat and additionally 35 of the heat energy was produced with fuels In 2020 the heat energy self-produced with natural gas and oil at properties in Finland totalled 392 TJ (10880 MWh)

Energy consumption in properties in other operating countries The heat energy was partly self-produced with natural gas and oil In 2020 the fuels used for self-produced heat totalled 148 TJ (4119 MWh)

total energy consumption In 2020 our energy consumption in all operating countries totalled 3825 TJ (including properties and logistics)

ENERGY CONSUMPTION OF PROPERTIES

Finland 2020 2019Electricity1 (MWh) 552372 560596District heat (MWh) 302185 316575Fuel for self-produced heat (MWh) 10880 11136Total energy consumption (MWh) 865437 888307Total energy consumption (TJ) 3116 3198

Other operating countries 2020 2019Electricity (MWh) 36023 75620District heat (MWh) 8486 16697Fuel for self-produced heat (MWh) 4119 20662Total energy consumption (MWh) 48628 112979Total energy consumption (TJ) 175 407

All operating countries 2020 2019Total energy consumption (MWh) 914065 1001286Total energy consumption (TJ) 3291 36051 includes electricity provided by Ankkuri-Energia and electricity purchased elsewhere by K-retailers and used by Kesko



RENEWABLE ENERGY


We will purchase 100 renewable electricity in Finland

In 2020 we purchased 552 GWh of renewable electricity produced with hydropower and bioenergy with Renewable Energy Guarantees of Origin (REGOs) from the Nordic countries

We will increase the production of solar power for our own use

In 2020 Kesko had 42 solar power plants installed at properties it manages A total of 93 GWh of electricity was produced with solar power At the end of 2020 the annual electricity production capacity of our solar power plants was approximately 11 GWh


Fuel consumption The energy consumed by Kesko Logisticsrsquo own transportation was 529 TJ in 2020 The fuel used was diesel In 2020 the total distance driven by Kesko Logistics was 359 million kilometres

Logistics operations in the other operating countries are mostly outsourced In 2020 logistics in Sweden and Poland consumed 48 TJ of fuel (diesel and gas)

A total of 588 TJ of fuels from non-renewable sources were used for logistics as well as self-produced heat of properties Renewable fuels were not consumed

ENERGY INTENSITY 302-3 Maintaining the cold chain throughout the grocery tradersquos logistics and grocery stores requires greater amounts of energy in comparison with other business sectors

SPECIFIC CONSUMPTION OF ENERGY PROPERTIES MANAGED BY KESKO IN FINLAND

kWhbr-m2 2020 2019Specific consumption of electricity 206 201Specific consumption of district heat 85 86

MANAGEMENT OF ENERGY EFFICIENCY302-4 The objective of our energy strategy is to achieve a 10 increase in energy efficiency by 2023 by updating refrigeration systems and lighting in stores for example Achieving the objective requires some 21 GWh of new energy efficiency measures annually To monitor the implementation and to manage the extensive energy efficiency measures we have together with our partner organisations developed and introduced the ETJ+ management system monitored by Motiva and the Energy Authority For the administration of our energy measures we use the industryrsquos state-of-the art information systems and our Energy Managers actively participate in developing new functionalities for them

We participate in the 2017ndash2025 action plan of the commerce sector Energy Efficiency Agreement In accordance with the agreement we commit ourselves to implementing energy saving measures that are equivalent to 75 of the 2015 energy consumption All K Group store chains in Finland are included in the agreement

Up to this point we have recorded energy saving measures of 71 GWh which is 90 of the target for 2025 The calculation includes electricity heating fuels and district cooling

new energy recycling system in K-food storesThe ingenious heat circulation system implemented in 2019 combines a very low-emission refrigeration system a heat pump and recovery systems needed for recycling energy It utilises the condensation heat generated as a by-product of refrigeration for heating the premises The innovation can reduce a propertyrsquos heat consumption by as much as 85ndash95 making the store almost carbon neutral instantly in terms of energy

The concept can be replicated in stores of all sizes The system is already in use in around 20 stores and was awarded the European Heat Pump City of the Year 2020 prize Motiva awarded the system the Energy Genius of the Year 2019 recognition



ENERGY EFFICIENCY IN STORES


In our energy strategy we aim to achieve a 10 increase in energy efficiency by 2023

In 2020 we implemented about 203 GWh of energy efficiency measures which is 97 of the annual target rate of 21 GWh in our energy strategy


1 Maintenance processes Real Estate Managers help K-stores in making energy consumption more efficient and in preparing long-term repair plans Renovation programmes contain estimates of the refurbishment that should be made within 5 to 10 years

The task of Energy Managers supporting Real Estate Managers is to carry out consumption analyses and to investigate the reasons for deviations in consumption and to make energy efficiency investment proposals and project plans Energy Managers report the impacts of the energy saving measures taken Maintenance projects cover nearly half of Keskorsquos annual energy efficiency target amount

2 utilising aiTowards the end of 2020 we were the first trading sector company to introduce a new type of method for analysing energy measurement data

In the method based on machine learning the aim is to more efficiently and quickly identify deviations related to the functioning of technical building systems by comparing data and data behaviour with corresponding sites We have already previously utilised similar analytics which is based on data stored by a building management system

3 updating refrigeration systems In food stores refrigeration systems can account for more than half of the total electricity consumed at small store sites

Condensation heat from refrigeration units is recovered at nearly all K-food stores which means that additional heat energy is needed only during very low sub-zero temperatures A new ingenious heat circulation system combines a very low-emission refrigeration system that uses a natural refrigerant a heat pump and recovery systems needed for recycling energy

Old systems which use R404A as refrigerant will be converted into energy efficient systems using environmentally friendly refrigerants by 2030 At the end of 2020 the refrigeration units at 243 K-food stores used carbon dioxide recovered from industrial processes as the refrigerant while units at 108 stores used R290 propane A total of 351 stores used natural refrigerants that complied with the requirements of the EUrsquos F-gas Regulation

4 lighting LED lights are used in all lighting solutions of property development projects Adjustable correctly directed LED-lighting can help save up to 50-60 of electricity consumed compared to traditional fluorescent tube and metal halide lighting solutions Switching to LED lighting will reduce the electricity consumption of lighting by approximately 40 KWhm2 resulting in annual savings of approximately euro5000 to euro50000 a year depending on the size of the store

5 Solar power Solar power is an excellent energy source for providing electricity to food stores since their electricity consumption is at its greatest during the summer when the stores and their refrigeration units require a lot of electricity for cooling

The solar panels installed at K-food stores cover around 10ndash15 of the storesrsquo annual electricity consumption On a sunny summer day solar power can cover as much as 60 of a food storersquos current consumption

A total of 93 GWh of electricity was produced with solar power for own use at K-food stores At the end of 2020 the total annual output of our 42 solar power plants in use was approximately 135 MWp and electricity production capacity was around 11 GWh

Energy solutions in K Grouprsquos stores

LED lighting Refrigeration Solar power

Maintenance Artificial intelligence



Reducing emissionsWe report direct and indirect (Scope 1 2 and 3) greenhouse gas (GHG) emissions from our operations according to the GHG Protocol standard

DIRECT AND INDIRECT GHG EMISSIONS (SCOPE 1 2 AND 3)305-1 305-2 305-3

Scope 1 Our Scope 1 emissions are caused by fuel consumption for generating heat at properties managed by Kesko and for the transportation of goods controlled by Kesko

The heat energy at properties was partly self-produced using natural gas and oil

The transportation of goods for Keskorsquos grocery trade in Finland is managed by Kesko Logistics Most of the logistics in the other operating countries are outsourced Emissions from logistics in the other operating countries were reported for Sweden and Poland

Scope 2 Our Scope 2 emissions are caused by the generation of electricity purchased by Kesko electricity used by Kesko and district heat consumed in properties managed by Kesko

DIRECT AND INDIRECT GHG EMISSIONS (SCOPE 1 AND 2)

Tonnes CO2-eq 2020 2019Direct (Scope 1) 38538 47721Finland 37394 40329

logistics (Kesko Logistics) 34850 37659self-produced heat (natural gas and oil) 2544 2670

Other operating countriessup1 1144 7392logistics (Sweden and Poland) 292 2946self-produced heat (natural gas and oil) 852 4446

Indirect (Scope 2) 50474 72444Finland 46536 51924

purchased electricity (market-based) 0 0purchased electricity (location-based)2 77884 77157purchased district heat (location-based) 46536 51924

Other operating countriessup1 3938 20520purchased electricity (location-based) 3232 17467purchased district heat (location-based) 706 3053

Total 89012 120165Finland Scope 1 and 2 total 83930 92253Other operating countries Scope 1 and 2 total 5082 27912

1 In 2020 Kesko Senukai became a joint venture and its emissions data was not reported In 2019 Kesko Senukai accounted for approximately 17 of Scope 1 and 2 emissionssup2 Following the GHG Protocol standard the location-based emission figure for electricity consumption in Finland has been reported The market-based figure is used for the emissions totals


Read more about renewable energy and energy efficiency


Scope 3Our indirect Scope 3 emissions are caused by the life cycle emissions of sold products and services such as the primary production of raw materials the manufacture of products packaging transportation and the use of products In addition indirect emissions come from such sources as our customersrsquo shopping commutes our personnelrsquos work commutes and business travel the final treatment of our waste and the emissions from production and distribution losses of the energy we procure

Our greatest indirect emissions are caused by the production of the products for sale (76) in the use phase of the products (20) and by the shopping commutes of customers (2)

GHG emissions intensity 305-4 The Scope 1 and 2 greenhouse gas emissions intensity is calculated in relation to net sales (2020 euro10669 million) and the average number of employees (2020 14034)

Scope 1 and 2 GHG emissions intensity2020 2019

Based on net sales (tonnes CO2e euro million) 83 112Based on average number of employees (tonnes CO2e person) 63 58

Tonnes CO2-eq 2020 2019UpstreamPurchased goods and services 5897900 6120100Capital goods (buildings) 5500 29600Indirect emissions of purchased energy (other than Scope 1 and Scope 2) 19000 26700Transport and distribution of goods1 10800 8400Waste 6100 8300Business travel1 900 2700Employee commuting1 11500 18500DownstreamShopping commutes by customers1 136000 141200Use of sold products 1560300 1523300End-of-life treatment of sold products 47800 46600K-retailer entrepreneurs 40900 938001 Boundary Finland

OTHER INDIRECT GHG EMISSIONS (SCOPE 3)

nitrogen oxides (nOx) sulphur oxides (SOx) and other significant air emissions 305-7 The electricity and heating energy consumed in properties managed by Kesko in Finland in 2020 caused bull NOX emissions 246 tonnes (2019 251 tonnes) bull SO2 emissions 209 tonnes (2019 213 tonnes) bull Amount of radioactive waste produced by nuclear power

04 tonnes (2019 04 tonnes)

The particulate emissions in 2020 for Kesko Logistics in Finland were bull NOX emissions 10 tonnes (2019 11 tonnes)bull SO2 emissions 01 tonnes (2019 01 tonnes)



Science based targets305-5 We were the first Finnish company to set climate targets approved by the Science Based Targets initiative in 2017

We aim to achieve the ambitious emission goals by increasing the use of renewable energy and by improving energy efficiency

logistics Kesko Logisticsrsquo target is to achieve carbon neutral operations by 2030 The reduction of emissions at Kesko Logistics is a long-term task bull We are modernising our vehicle fleet utilising renewable

fuels and increasing the use of electric trucks as the technology develops In 2020 the first two all-electric trucks were introduced for deliveries in the Helsinki region

bull Efficiency of logistics centralised distribution optimisation of delivery routes and high volumetric efficiency

bull Efficient reverse logistics collection of purchase loads carrier trays pallets roll containers cardboard and recycled bottles and cans on the return route

bull Courses in economical driving all of Kesko Logisticsrsquo more than 500 contract drivers have been trained



SCIENCE BASED TARGETS


We commit to reducing our direct and indirect (Scope 1 and 2) emissions 18 by 2025 from base year 2015

Scope 1 and 2 emissions have decreased 21 compared to the base year In 2020 Kesko Senukai was reported as a joint venture If Kesko Senukai would have been included in the 2020 emissions as in previous years the emissions reduction would have been approximately 5

In addition we are committed to reducing our supply chain emissions (Scope 3) so that 90 of Keskorsquos key suppliers will set their own GHG emissions reduction targets by 2025

Out of Keskorsquos key suppliers in 2020 45 had set their own emission reduction targets


LOGISTICS EMISSIONS


The target of Kesko Logistics is to reduce emissions relative to the net sales index by 10 from the 2011 base year by 2020

The relative emissions decreased by 21 from the level of the 2011 base year and we have reached our target In 2020 the relative emissions increased by 26 from 2019 due to regional variations in transportation caused by the Covid-19 pandemic



Emission reductions of products for saleBy far the greatest indirect emissions of Kesko are caused in the production of the products for sale and during their use phase These emissions can be mitigated by offering selections of products and services causing less emissions and by means of customer communications

We have identified sustainable products for each division and we promote their sales

EnViROnMEntal iMPaCtS OF FOOD CHOiCES

Households can decrease the environmental impact of their food choices by reducing the consumption of animal-based products and food waste created at home

We help our customers decrease the carbon footprint of their shopping In the K-Ostokset application we offer a carbon footprint calculator which provides information on the carbon footprint of the customerrsquos shopping basket at product category level

We offer a wide selection of plant-based products and encourage our customers to increase the use of vegetables

HOuSinG SOlutiOnS

The building and technical trade offers consumers and business customers diverse product selections and expertise for improving the energy efficiency of building and renovation projects K-Rauta stores provide a free renovation support channel for customers offering advice for energy saving renovation and repairs



ElECtRiC CaRS aRE inCREaSinGly POPulaR

In 2020 K Grouprsquos car trade divisionrsquos selection included 28 (2019 20) plug-in hybrid car models (PHEV) and 12 (2019 6) all-electric cars as well as 11 (2019 11) car models (passenger cars and vans) using natural gas or biogas as fuel In 2020 the registrations of Volkswagen Audi SEAT and Porsche plug-in hybrids in Finland increased by 2038 whereas the registrations of electric cars increased by 6048 compared to 2019 The registrations of natural gas or biogas cars decreased by 371 compared to 2019

We have built an extensive network of electric vehicle charging points adjacent to K Group stores in order to advance the electrification of cars

At the end of 2020 the K Charge network had 109 fast charging points and 274 standard charging points at a total of 78 charging stations The K Charge network is the largest fast charging network in Finland with standard charging also offered We also offer three extremely efficient high-power charging (HPC) stations in cooperation with IONITY The electricity provided at all K Charge stations is produced with Finnish wind power

In 2020 the amount of fast charging at K Charge stations increased by 30 even though only two new stations were opened

Customer shopping commutes The emissions caused by customer shopping commutes are a significant source of indirect emissions for Kesko The majority of shopping commutes are made by car

We offer Finlandrsquos most comprehensive network of neighbourhood stores with the best services When the nearby neighbourhood store offers a selection suited for its customers shopping commutes are shortened and they can be travelled more often by foot bicycle or public transportation especially in cities The additional services available at K-stores reduce emissions caused by customer commuting because many errands can be run during the same shopping trip Increasingly online shopping also reduces customer commuting

Employee commuting We want to support our employees in commuting to work in healthy environmentally friendly ways such as cycling walking running or public transport

Our K-Kampus headquarters has a separate parking space for bicycles in the parking garage as well as showers dressing rooms a drying room and a bicycle maintenance space specifically designed for those using physical activity to commute to work

K-Kampus is located next to good public transport connections which enables the personnelrsquos and visitorsrsquo arrival by public transport Kesko provides an employment benefit to its personnel which can be used for the payment of public transport

business travelDue to the Covid-19 pandemic business travel decreased in 2020 and online meetings became a standard part of our office workersrsquo daily life In 2020 the air miles flown by Kesko employees travelling for business totalled 12 million (2019 86 million)

Kesko offers 10 shared bicycles including some electric bicycles to the personnel at K-Kampus for work-related errands during the working day

At the beginning of 2020 we introduced four shared K-Kampus cars two of which are electric cars one is a natural gaspetrol hybrid and one is a multi-purpose vehicle



Water303-1

Our most significant impacts from water consumption are caused by imported products for sale which originate from areas suffering from water scarcity or contamination Due to the large consumption of imported goods and the virtual water footprint associated with them almost half (47) of the water footprint of Finnish consumption falls outside of Finland

WATER RISK IN THE SUPPLY CHAINAll of the own brand fruits and vegetables we import to Finland are GLOBALGAP certified The environmental requirements of GLOBALGAP certification include a requirement on good water management Finnish fruits and vegetables meet the requirements of the Finnish Horticultural Products Societyrsquos Kotimaiset Kasvikset quality certification

Our objective is to identify critical products in terms of water risk By conducting a water risk assessment of products we identify the water basins most affected by water scarcity or contamination issues in their supply chain The results of water risk assessments are used to plan actions

We have conducted a water risk assessment of our avocado sourcing using the WWFrsquos Water Risk Filter tool On the basis of the assessment we have increasingly put emphasis on purchases from areas with lesser water risks Next we will assess the water risks involved in the supply chain of Pirkka mini plum tomatoes

WATER CONSUMPTION AT OUR PROPERTIES303-5

Properties managed by Kesko use water from municipal water supplies in all operating countries Waste water from Keskorsquos operations goes to municipal sewer systems

WATER CONSUMPTION BY COUNTRY

m3 2020 2019Finland 980099 1036734Sweden 8191 7107Norway 9317 12485Estonia 1599 7762Latvia 883 12061Lithuania 302 47512Poland 2695 5206Belarus - 64879Total 1003086 1193745



BiodiversityBiodiversity has risen alongside climate change as a significant global threat

We will strengthen our biodiversity work and prepare division-specific goals to promote biodiversity

Our goal is to prevent nature loss in our own operations and our value chain The starting point is to act in a sustainable fashion for the good of biodiversity and enable a sustainable lifestyle for our customers in their daily life in food housing and mobility

Ecosystem services used by Kesko We have carried out an ecosystem services review in order to identify the ecosystem services provided by nature which we depend on and where we can have an impact

Provisioning services used by K Group are material benefits provided by ecosystems such as food raw materials of products energy and water

Regulating services are ecosystem processes that life on earth is based on Key processes for K Group include climate and air quality pollination pest and disease control waste management soil formation photosynthesis and circulation of nutrients and water

Nature also provides non-material benefits which are called culture services K Group benefits from culture services

such as the beauty of nature unpolluted nature and diverse thriving rural landscape

Food

Energy

Water Raw

materials for products

Climate and air

quality regulation

PollinationSoil formation

Prevention of pests and diseases

Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side

Ecosystem services K Group depends on

REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING



SUPPLY CHAIN 304-2 As a retail sector operator it is clear for K Group that our biodiversity work focuses on our selections as well as our own operations One of the main goals of K Grouprsquos biodiversity work is to build our selections in such a way that products and their packaging burden biodiversity as little as possible throughout their life cycles

We observe our sustainability policies for sourcing to prevent causing risks to biodiversity in our supply chains

Raw materials critical to biodiversity in our supply chain include fish and shellfish timber palm oil soy cocoa and cotton Cotton production consumes a lot of water for example The spreading of production of palm oil and soy to new areas causes deforestation and a threat to biodiversity



Sustainable fish stocks preferred in K Grouprsquos fish selections K Group has Finlandrsquos largest selection of MSC certified fish and shellfish The first MSC traceability certificates for K-food store fish counters were issued in 2019 By the end of 2020 the fish counters of 39 K-food stores had been awarded the MSC and ASC traceability certificates which promote sustainable fishing and aquaculture

Every K-food store follows K Grouprsquos fish and shellfish policy which is based on the WWF Fish guide and has been in effect for 12 years already

We participate in efforts to protect the baltic SeaOur selection includes three products which use the abundant fish species of the Baltic Sea as an ingredient or feed reducing the environmental load on the Baltic Two Pirkka archipelago fish patty products are made of Baltic bream selectively fished for the purpose of managing fish stocks In addition the feed for the Pirkka Parhaat Benella rainbow trout farmed in Finland uses Baltic herring and sprat as raw material The recycling of nutrients reduces phosphorus load in water bodies and improves the condition of the Baltic Sea

In spring 2020 K-retailers in the Lahti region and Kesko joined the efforts to protect the Vesijaumlrvi lake K Grouprsquos support is especially targeted to the planting of predatory fish the purpose of which is to reduce eutrophication of the lake and to improve the opportunities to use the lake for recreation and fishing

K Grouprsquos headquarters K-Kampus has been awarded the WWF Green Office certificate K Grouprsquos Green Office payments support WWF Finland in its efforts to protect the Baltic Sea

We avoid reduce and recycle plasticWe create operating models that prevent plastics from ending up in water bodies and elsewhere in the environment Read more about our plastics policy and our progress towards our targets

WE RESTORE HABITATS 304-3 K Fishpaths In 2017 we began a multi-year collaboration extending to 2021 with the environmental organisation WWF Finland to save endangered migratory fish populations With the K Fishpaths collaboration we aim to remove barriers to migratory fish spawning grounds and create new gravel beds in a spirit of cooperation with local operators land and waterway owners local K-retailers and volunteers The purpose of the collaboration is also to increase awareness of the endangered nature of migratory fish

In 2020 the fourth year of the K Fishpaths collaboration the Covid-19 pandemic meant that we were primarily only able to organise the restoration of migratory fish habitats together with 14 K-stores land and

waterway owners and other local operators We restored a total of 66 spawning grounds at 8 different locations removed five barriers that prevent migratory fish from swimming upstream and freed 25 km of spawning grounds and habitats which the fish had previously been unable to reach

In 2017ndash2019 electrofishing was conducted in the streams restored as part of the K Fishpaths collaboration to study the changes taking place in the fish stock

Read more about K Fishpaths

Store sites We build store sites only in areas planned by municipalities for business properties Surveys of contaminated land are made annually in conjunction with construction work and real estate transactions In 2020 Kesko had one site in Finland where the soil was cleaned according to restoration targets

Kesko does not have any protected habitats of its own

Pirkka archipel-ago fish patties are made of baltic bream fished for managing fish stocks


The K Fishpaths collaboration between K Group and WWF Finland is a great example of a company and an environmental organisation working together to create new operating models and promote biodiversity

of new spawning grounds and

habitats

Over 80 kmMigration barriers have

been removed by building thresholds in culverts that block fish migration or by

replacing the culvert with a new one

Read more on the K Fishpaths page



Fishpaths

volunteers signed up

Over 900

gravel beds created

Almost 300

MATING BELONGS TO ALL all migratory fish in Finland are endangered because our streams and rivers are full of barriers that block migration such as culverts or old mill dams During the four years of the K Fishpaths collab-oration between K Group and WWF Finland barriers that block fish migration have been mapped and removed and gravel beds for spawning fish have been restored across Finland the communal events bring together local operators K Group stores customers and other volunteers

Promising results have already been received from the locations restored during the first years of collaboration the endangered trout spawns and breeds in streams formerly inaccessible to the fish the collaboration between K Group and WWF Finland to save endangered migratory fish will continue until the end of 2021


Circular economy and waste managementThe transition to a circular economy requires increasingly efficient circulation of materials We provide our customers with diverse recycling services for packaging waste and discarded items and develop innovative circular economy solutions in cooperation with other operators

STRINGENT TARGETS FOR PACKAGING AND PLASTICSIn our packaging policy published in 2020 we set the target that all the packaging used in our own brand products will be recyclable reusable or biodegradable by the end of 2025

In our plastics policy we have set stringent targets for the avoidance reduction and recycling of plastic We are a signatory to The New Plastics Economy Global Commitment

In its own packaging strategy the grocery trade has set more detailed targets and indicators for packaging development work

towards targets with packaging changesIn 2020 we made changes to the packaging of a total of 77 own brand products in compliance with our packaging and plastics policy We reduced plastic in the packaging of our own brand products by a total of 214 tonnes Examples of our actionsbull We reduced plastic by modifying the packaging of

berries minced meat and milk drinks Moreover for some products such as herbs and lettuces we replaced the plastic packaging with paper In addition to retail packaging we also replaced some of the plastic used in sales batch packages such as for canned food

bull We replaced fossil-fuel plastics with recycled plastics in the packaging of numerous products such as cleaning products New fruit products were launched in packages made of recycled plastic We also piloted replacing fossil-fuel plastic with a renewable raw material certified softwood pulp in the packaging of flowers

bull We launched new products in sustainable packaging materials house plants in FSC certified paper takeaway sandwiches in cardboard and toilet papers in paper packaging

bull We improved recyclability in Pirkka baby foods and spices we removed aluminium from the packaging making them recyclable

bull We collected plastic packaging from our stores and used the plastic material in the packaging of own brand toilet paper and paper towels

Packaging and reduction of plasticPackaging material of Kesko grocery trade own brands (tonnes) 2020Wood and paper fibre 6330Metal 1320Glass 1820Plastic 4640Total 14110Reduced plastic (from base year 2019) 8

Kesko logisticsrsquo centralised collection services In 2020 around 3649 tonnes of cardboard (2019 3650) and about 111 tonnes of plastic (2019 90) were centrally directed by Keskorsquos grocery trade for industry reuse

The reverse logistics operations of Kesko Logistics transport beverage containers and crates from stores for reuse and recovery

KESKO lOGiStiCSrsquo REVERSE lOGiStiCS

1000 pcs 2020 2019Aluminium cans 95203 86007PET bottles 67044 62887Recyclable glass bottles 6812 9803Reusable crates 21560 21106



Circular Economy agreement of stores in Finland K Group offers all K-food stores and building and home improvement stores in Finland the opportunity to participate in the national centralised Circular Economy Agreement The aim is to prevent the creation of waste increase the efficiency of recycling and advance the circular economy

At the end of 2020 a total of 664 stores and K Group business locations (2019 664) participated in the Circular Economy Agreement The recovery rate of the waste generated in these sites was 100 (2019 100) and the recycling rate was 75 (2019 74) We have signed the commitment for materials efficiency in the food industry and set an objective to increase the recycling rate of stores to 78

We develop circular economy solutionsWe actively develop solutions together with our partners to utilise for example production side streams or food waste

Read more about our actions to reduce plastic

COLLECTION SERVICES FOR OUR CUSTOMERS IN FINLAND301-3

At the end of 2020 there were 409 (2019 413) Rinki eco take-back points intended for recycling consumer packages (fibre glass metal) in connection with K-food stores Plastic was collected at 229 (2019 227) eco take-back points

In connection with our stores customers can also return deposit beverage containers batteries and accumulators waste electrical and electronic equipment (WEEE) and discarded clothing for recycling

Packages and items returned by customers to recycling points at K Group stores in Finland 2020 2019Deposit aluminium cans (million pcs) 414 383Deposit recyclable plastic bottles (million pcs) 164 146Deposit recyclable glass bottles (million pcs) 36 33Batteries and accumulators (tonnes) 462 413WEEE (tonnes) 177 159



WASTE FOR RECOVERY306-2 Our objective is to minimise and recover all waste from our operations

Waste in all operating countries Tonnes 2020 2019Non-hazardous waste 23201 32128Recyclingrecovery 22532 26696Landfill 669 5432Hazardous waste 1476 1611Recyclingrecovery 966 1234Hazardous waste treatment 510 377Total 24677 33739

Waste recovery rates In Finland Keskorsquos waste statistics mostly cover warehousing operations whereas in the other countries most of the waste included in the statistics is generated in retail The recovery rate includes all waste except waste to landfill The type of waste treatment was determined by the waste management company

In 2020 the recovery rate for reported waste management in Finland was nearly 100 and in the other operating countries it was 92 (includes hazardous waste treatment)

Finland Sweden Norway

Tonnes 2020 2019 2020 2019 2020 2019Non-hazardous waste 15564 15934 3666 2652 3116 2581Recyclingrecovery 15561 15931 3410 2503 2993 2515Landfill 3 3 256 149 123 66Hazardous waste 526 427 235 174 692 560Recyclingrecovery 297 281 2 105 647 520Hazardous waste treatment 229 146 233 69 45 40Total 16090 16361 3901 2826 3808 3141Recovery rate 9998 9998 93 95 97 98

Waste Finland Sweden and norway

Estonia Latvia Lithuania


Waste Estonia latvia and lithuania

Poland

Tonnes 2020 2019Non-hazardous waste 531 421Recyclingrecovery 286 129Landfill 245 292Hazardous waste 17 21Recyclingrecovery 17 21Hazardous waste treatment 0 0Total 548 442Recovery rate 55 34

Waste Poland



We reduce food waste We reduce food waste in cooperation with the entire food supply chain from primary production to the customer Our objective is to reduce K Grouprsquos identified food waste relative to sales by 13 from the 2016 level by 2021 By the end of 2020 food waste from K-food stores had decreased by 12

FOOD WASTE PREVENTION Our primary means of reducing food waste is the management of selections New tools have been developed for the planning of and forecasting of store-specific selections which help make the selection correspond with what local customers want This also reduces waste when the selection meets the demand at each store Efficient transport and store logistics a self-control system and staff training also help to prevent waste The optimisation and continuous development of packaging features play a key role in reducing waste

at the store Stores are instructed to pay special attention to the expiration dates of fresh foods and foods with short expiration times As a productrsquos lsquobest beforersquo or lsquouse byrsquo date approaches K-food stores can sell the product at a discount

The circular economy also plays an important role in reducing food waste K-stores are exploring numerous ways of utilising their own food waste by turning it into new added value products Fruits vegetables and bread thrown away as waste can become raw materials for new jams

juices smoothies and even beer In 2020 K-retailers and Suomen Jaumlaumltelouml created two ice cream innovations that utilise waste Bananasajaumlaumlmauml made of overripe spotted bananas that go to waste in K-stores and Abbelsiinijaumlaumlmauml made of orange peel left over from the fresh orange juice machines at K-stores

Some K-food stores use digital solutions such as the ResQ Club waste food app which customers can use to easily buy food nearing their expiry dates at a discount Some of the K-food stores which have adopted the operating model have managed to cut down food waste to about one-sixth of what it used to be

K Group food waste hierarchy

Food waste prevention measures product selections electronic forecast and order systems efficient transport and store logistics

employee training and optimisation of packaging properties

Price reductions of products approaching their best before dates

Utilising edible food removed from sale in new products

and donations to food aid organisations

Utilisation of non-edible organic waste for energy


Discarded fruit and vegetables from our central warehouse are made into juice


at the central warehouseAt times waste is generated in the warehousing operations of fruit and vegetables Fruit and vegetable products may be damaged on their way to the warehouse and some of them fail to meet the required standards due to their appearance As these kinds of edible yet non-sellable fruit and vegetable products provide excellent ingredients for juices for example we initiated a collaboration with juice making company Thrsty in 2020 Hyvis juice made from fruit and vegetable waste from Keskorsquos central warehouse was introduced to K-food stores in November 2020 and we have utilised more than 20000 kg of non-sellable products in making the juice

Food donations The majority of K-food stores donate edible food products they can no longer sell to local charities which then distribute the products as food aid to those in need In 2020 the donations of K-food stores to charities declined for the first time The decline was 11 from 2019 due to the Covid-19 pandemic which caused many of the distributors of food aid to close down their operations especially during the spring and summer of 2020

biogas from food waste In our cooperation with Gasum the biogas produced from inedible food waste collected from K-food stores is utilised as energy in the production of new Pirkka products Three manufacturers of Pirkka products around 400 K-food stores and the Kesko Logistics central warehouse are included in the operating model

In 2020 some 5900 tonnes of organic waste (2019 4800) was turned into approximately 4400 MWh (2019 3600) of biogas CO2 emissions were reduced by 876 tonnes compared to natural gas (emission factor 199 g CO2kWh) and by 1157 tonnes compared to fuel oil (emission factor 263 g CO2kWh)

Household food waste The food waste pages in Finnish on K-ruokafi provide our customers with information on how to reduce food waste The K-ruoka mobile app helps our customers plan their grocery shopping by offering personalised benefits store-specific offers a smart shopping list and about 8000 K-ruokafi recipes

Food waste from K-food stores2020 2019

Identified food waste (tonnes) 16568 17920Identified food waste in proportion to food sold (kg) 14 156Development of food waste in proportion to food sold (kg) from base year 2016 -12 -3



IN THIS SECTION

Personnel statistics 56Wellbeing and work capacity 61Competence development 67Performance management 69Diversity inclusion and equality 70K Code of Conduct 72

WORKING COMMUNITY

The foundation of our operations is our professional and committed personnel We provide them with diverse career and development opportunities in various positions

We are committed to promoting equal opportunities and non-discrimination in all of our operations We aim to be an innovative and evolving working community in which every employee is accepted as they are

We focus especially on developing corporate culture employee experience competence development leadership and employee wellbeing


55SuStainabilityKESKOrsquoS yEaR 2020 i


NEARLY 60 OUR EMPLOYEES WORK IN FINLAND 401-1

In 2020 Kesko had an average of approximately 17629 (2019 20852) full-time equivalent employees in seven countries Finland Sweden Norway Estonia Latvia Lithuania and Poland 59 of the personnel were based in Finland and 41 in our other operating countries

towards a new careerInternal job rotation opens up opportunities for various careers options In 2020 2093 internal transfers were made in Finland (2019 2604) and 689 in the other operating countries (2019 2124)

A ldquoNew Jobrdquo operating model is used in Finland for situations where an employeersquos work capacity is permanently reduced compared to the requirements of the current job and the employee is no longer capable of returning to their former job The model provides a low-threshold way to search for a job and supplements the vocational rehabilitation supported by earnings-related pension providers

By the end of 2020 with the help of this operating model 13 persons had been employed in new jobs within or outside the Group or were in vocational rehabilitation or training

new recruitment pilot that utilises artificial intelligenceNew employees are needed all the time in K Group in K-Citymarket stores and logistics in particular It typically takes about six weeks to complete the recruitment process starting from the moment when the need for a new employee is identified A new kind of recruitment operating model which utilises artificial intelligence was piloted in K-Citymarkets in the Helsinki region in autumn 2020

The new model makes it quick and easy to apply for a job You can even answer the simple multiple-choice questions

on your smart phone A separate job application is not needed at any point in the recruitment process

The application process which utilises artificial intelligence focuses on finding a good employee without discriminating anyone Therefore applicants are not asked to provide information on matters that have no relevance for the selection such as age gender or place of residence or a photograph

We aim to continue with the piloted operating model in 2021


EMPLOYER IMAGE


We are the best employer in the trading sector in terms of job satisfaction

Ranking 12th K Group improved its position in the Universum Ideal Employer Ranking survey K Group was up by 10 positions and received an award for being one of the best climbers Ranking 28th in the Universum student survey we were up by 2 positions

In addition K Group managed to improve its reputation by 021 units in T-Mediarsquos ReputationampTrust survey ending up with the score of 380 thus rising to 8th place in the TOP10 list

K Group also climbed 21 positions reaching 14th place in the Academic Work Young Professionals Attraction Index survey

We will continue our systematic work to improve employer image both with our external and internal key stakeholders

We will continue to strengthen our cooperation with selected educational institutions at various levels of education



2020 2019 2018Finland on 31 Dec 12647 12657 11878Other operating countries on 31 Dec 5003 12511 11523Total on 31 Dec 17650 25168 23401Finland average 10339 10194 9822Other operating countries average 7290 10658 9757Total average 17629 20852 19579

2020 2019 2018Fixed-term employees of total personnel on 31 Dec Finland 156 149 141Other operating countries 129 69 67Whole Group total 148 109 94

Part-time employees of total personnel on 31 Dec Finland 339 372 408Other operating countries 248 130 78Whole Group total 313 252 241

Changes in the number of Kesko employees

Fixed-term and part-time employments at Kesko



Finland Sweden Norway Estonia Latvia Lithuania PolandTotal number of personnel at 31 Dec 12647 1776 2095 156 84 75 817Average number of personnel in 2020 10339 1340 1220 154 84 75 822Number of new employments1 3149 413 260 20 11 14 161- women 1726 129 69 10 2 4 27- men 1423 284 191 10 9 10 134Number of terminated employments1 2973 251 213 30 15 15 159- women 1545 82 57 18 2 4 17- men 1428 169 156 12 13 11 142Percentage of new employments1

- women 548 312 265 500 182 286 168- men 452 688 735 500 818 714 832Percentage of terminated employments1

- women 520 327 268 600 133 267 107- men 480 673 735 400 867 733 893Terminated by employer 65 76 42 333 733 267 94Total turnover rate 2 171 133 102 192 179 200 1951 Including summer employees 2 Excluding summer employees When calculating the number of terminated employments each employee is included only once whereas one person may have several new employments included in the total number

Keskorsquos personnel statistics for 2020 analysed by operating country



Age distribution of Kesko personnel in Finland in 2020

under 26 years 2877 2280

26ndash35 years 3157 2502



over 55 years 1282 1016

12620

under 26 years 228026ndash35 years 250236ndash45 years 232346ndash55 years 1880over 55 years 1016


18

Age distribution of Kesko personnel in the other operating countries in 2020

kpl

under 26 years 967 1924 xxxx

26ndash35 years 1096 2181 xxxx



over 55 years 723 1439 xxxx

5026



19

Distribution of Kesko personnel by division at 31 Dec 2020

Grocery trade 8286 4695 xxxx

Building and technical trade 7193 4075 xxxx

Car trade 1310 742 xxxx

Common operations 861 488 xxxx

17650

Grocery trade 4695Building and technical trade 4075Car trade 742Common operations 488


20

Recruits age distribution in 2020

kpl

under 26 years 2547 6323 xxx

26ndash35 years 855 2123 xxx



over 55 years 72 179 xxx

4028



21

Terminated employments age distribution in 2020






365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22



Read more about pensionsRead more about share-based compensation plan

WE OFFER COMPREHENSIVE EMPLOYEE BENEFITS401-2 401-3

In Finland all personnel are subject to statutory pension security Both the permanent and temporary personnel in Finland have statutory insurance against occupational injuries commuting injuries and occupational diseases

In addition we offer our personnel more extensive than statutory occupational health care services retirement benefits versatile shopping benefits in K Group stores and the staff store as well as the possibility for private car leasing for employees In all operating countries we support our employeesrsquo leisure activities in different ways The Finnish companies provide benefits for physical exercise cultural activities commuting and wellbeing services

Some of the companies in our operating countries also give financial support to their employees through different situations in life such as when a child is born during a childrsquos first year at school in the event of the death of a close relative and in other special situations

Parental leave2020

Finland Other

countriesNumber of employees who have taken parental leave 621 155Women 430 80Men 191 75Number of employees who have returned to work after parental leave 412 134Women 244 64Men 168 70

In all of our operating countries our personnel both men and women are entitled to family leaves (maternity paternity parental and childcare leave)

In Finland the parent can continue their family leave if desired until the child turns three Of this period the duration of maternity leave is around 4 months parental leave around 6 months paternity leave around 9 weeks of which 18 weekdays can overlap with the maternity leave or parental leave At the end of the parental leave the parent may choose to continue on childcare leave which ends at the latest when the child turns three The parents of school children starting first or second grade are entitled to partial childcare leave with their working hours shortened to 30 hours per week at maximum

Performance bonuses and share plans The performance bonus schemes cover all personnel with the exception of sales assistant jobs and jobs covered by other types of performance bonus schemes or commission systems Criteria for the performance bonus scheme include for example the Grouprsquos and the divisionrsquos operating profit the sales and profit of the employeersquos own unit and customer satisfaction or market share Depending on the role personal performance bonus targets may also be set

In spring 2020 around euro186 million (2019 euro189 million) was paid in Finland in bonuses under the 2020 performance bonus schemes accounting for approximately 40 (2019 41) of the total payroll In 2020 the total

remuneration paid in the form of performance bonuses sales commissions and other corresponding monetary remuneration was as follows bull In Finland euro197 million (2019 euro193 million) bull In the other operating countries euro10 million

(2019 euro34 million)

The maximum performance bonus amounts vary depending on the profit impact of the personrsquos role and are equivalent to 10ndash100 of the personrsquos annual salary

Kesko operates a share-based compensation plan for some 130 members of management and other specified key personnel

Pensions 201-3

New pensions were granted to 171 people (2019 204) in Kesko Group in Finland Of these 38 were disability pensions (2019 35) of which 15 (2019 14) were partial disability pensions Rehabilitation benefit is a form of fixed-term disability pension granted with the aim that the employee is rehabilitated and returns to working life Rehabilitation benefits were granted for the purpose of retraining or work trials to 66 people (2019 50) who were at a clear risk of incapacity for work within a few years The average retirement age of employees in 2020 was 621 (2019 613) The average retirement age for old-age was 633 (2019 637) and the age for disability pension was 578 (2019 47) In the other operating countries 21 (2019 35) employees retired



Wellbeing and work ability OCCUPATIONAL HEALTH AND SAFETY403-1 403-2 403-3 403-4 403-5 403-6 403-7 403-8 403-9 403-10

Managing the Covid-19 pandemic from the perspective of employeesrsquo health securityDuring the Covid-19 pandemic the health and occupational safety of employees have been key factors in responsibility for personnel K Grouprsquos systematic management system has been a key factor in being prepared for the exceptional situation caused by the Covid-19 pandemic and in successfully managing the situation HR has worked together with risk management security communications and the divisions on Covid-19 contingency planning which has been updated on a regular basis throughout the pandemic Cooperation and reporting by retailers have been developed which has increased the chainsrsquo agility to adjust their operations according to measures required by the pandemic There has been special emphasis on ensuring security of supply for logistics and stores and ensuring the safety of customers and employees using all means available Statutory assessment of occupational risks has been regularly updated as the pandemic situation has changed

Throughout the different stages of the pandemic extensive preventive health security measures have been in use at all locations includingbull encapsulating warehouses to avoid any potential risks for

infection

bull protecting staff and customers at the stores (eg with plexiglass screens at checkouts face masks and safe distances)

bull travel securitybull enhanced ventilation and cleaning procedures bull various supportive measures for the personnel such

as ensuring functioning remote connections Covid-19 pages on the My K intranet constantly updated Covid-19 instructions and versatile services to support the wellbeing of the personnel

At the outbreak of the pandemic we were among the first companies in Finland to start testing personnel for Covid-19 In Finland we secured access to Covid-19 testing without delay for employees with even mild symptoms carried out tracing of employees potentially exposed to the virus and offered treatment for employees with Covid-19 symptoms through an occupational health service provider By the end of 2020 nearly 5000 CoV PCR tests had been carried out in Finland The number of positive tests for Covid-19 that came to our knowledge was 182

We updated our instructions on remote work to match the situation in the Covid-19 pandemic taking into account both the independent assessment of work risks and the services supporting the wellbeing of the personnel

We use theme-specific (eg knowledge work occupational health) pulse surveys to always ensure an up-to-date understanding of how employees are coping under the exceptional working conditions and develop operations based on our findings In 2020 the feedback we received



from the pulse surveys was mainly positive To provide support in the new situations we conducted for example various virtual discussion sessions for personnel and Teams sessions for managers on topics related to leadership in the exceptional situation and the pandemic For those working remotely we agreed on discounts for purchasing ergonomic equipment and physiotherapists and partners held virtual office workout sessions on a weekly basis Health security was one of the topics in the divisionsrsquo remote strategy info sessions and employees had the opportunity pose their questions to experts

We also supported personnel and managers in the following ways by implementing extensive health security measures at different locations Covid-19 on-call services provided by occupational health and HR webinars for the personnel and the managers pulse surveys on remote work and the exceptional wokring conditions and surveys carried out by occupational health care to find out how the employees are coping with the situation The feedback from the personnel on the support provided during the Covid-19 pandemic has been positive and we have also used the feedback to develop our operations Office workers used the so-called hybrid work model ie worked either at the office or remotely depending on the pandemic situation or by combining the two In the early stages of the Covid-19 pandemic the transition to remote work was supported by allowing our employees to take monitors and special office chairs home for remote work

In occupational health care we changed our operating practices and made use of various electronic tools such as

an online health survey to assess health and risks to work ability and we took online appointments extensively into use We also started to hold discussions on work ability online We drafted separate instructions for employees and managers on remote functions related to health and work ability risks The physical and mental work ability and wellbeing of personnel was supported by various digital training and information sessions and with online services that support wellbeing For example to support mental wellbeing we offered the K Mindbalance online service for personnel and retailers The Mielen Chat and Mielen Sparri mental health chat services offered by an occupational health service provider have been in use throughout the Covid-19 pandemic

As the Covid-19 pandemic has progressed at different speeds in our operating countries the countries have been responsible for their own contingency measures for the situation We have supported the operating countries centrally with K Grouprsquos daily global situation report Throughout the pandemic in health and security issues we have carried out close and regular collaboration with both employee representatives and with labour protection personnel

In Finland we actively participated in the work of the Enter 2020 group of the Confederation of Finnish Industries (EK) together with other companies The grouprsquos member companies have had an impact on Covid-19 testing capacity and best practices in customer service logistics and knowledge work K Grouprsquos extensive contingency planning and health security measures to cope with Covid-19 have

also raised public interest We shared Keskorsquos experiences on best practices related to the health and security of personnel at numerous events on social media and in newspaper articles throughout the year

improving employeesrsquo occupational health and safety and wellbeing through management by informationWe aim to continuously and systematically improve the health and occupational safety of our personnel in a holistic way Common principles of wellbeing at work and occupational safety are in use in all our operating countries Objectives have been set by Kesko Group for personnel wellbeing and occupational safety and the results are reported annually to Keskorsquos Board of Directors We systematically go through all key indicators quarterly with the businesses and continuously make improvements based on them The aim of our K Well wellbeing model is to produce a working day experience which creates wellbeing It has also worked well during the Covid-19 pandemic

Information security is of utmost importance in all of our operations and it is monitored In Finland the Act on the Status and Rights of Patients prescribes regulations on the confidentiality of patient data in occupational health care In health care the level of data protection is the highest possible and the law requires the information in patient documents to remain confidential A health care professional such as a doctor or nurse or other person working in a health care unit must not without the written consent of the patient disclose any information included in the patient documents to a third party Occupational



health care has its own patient information system which is separate from other information systems at Kesko To secure data protection we make occupational health log data inspections four times a year and no anomalies have been detected

Occupational health plays a key role in maintaining work abilityAs an employer Kesko Group offers more extensive than statutory occupational health services to all employees in Finland including both measures based on work ability management and occupational safety and measures related to the medical treatment and rehabilitation of the employee In addition to the statutory occupational health care Keskorsquos employees are entitled to comprehensive medical examinations and specialistrsquos consultations needed for their treatment through Kesko Occupational Health In addition to appointments with specialists Kesko Occupational Health provides psychologist occupational health nurse and occupational physiotherapist services Our occupational health care personnel meets the statutory professional competence requirements and all of our doctors are occupational health care specialists In Finland Kesko Occupational Health provides services for employees in the Helsinki region and purchases occupational health care services from one service provider for employees elsewhere in the country

The employer employees and occupational health care co-operate to prevent occupational diseases and injuries promote the health and safety of the work environment

as well as ensuring the employees work ability at different stages of career In 2020 the focus areas in strategic occupational health cooperation were management by information strengthening the K Culture maintaining personnel wellbeing at work and supporting managerial work The priority for occupational health care operations is on preventive measures and early identification of risks regarding both the employeersquos health and work ability We continuously evaluate and prevent work-related risks which may be injurious to employeesrsquo health In 2020 we especially focused on measures related to the Covid-19 pandemic such as testing safety instructions and communication

We assess the effectiveness of operations by monitoring accessibility Group sickness absence rate distribution of diagnoses and indicators of occupational injuries and pension risks (KPIs) In addition we survey customer satisfaction in various ways several times a year

In 2020 11937 Kesko Group employees in Finland were covered by occupational health services (2019 11842) A total of some euro67 million (2019 euro58 million) was spent on occupational health care in Finland in 2020 Of the occupational health care expenses 44 was allocated to promoting work ability and the wellbeing of personnel

In February 2020 we introduced a new work ability system for use by managers HR and Occupational Health to support the wellbeing of personnel to monitor sickness absences and to anticipate risks of incapacity for work All

the work ability management data are stored in the system centrally and securely We supported the roll-out with over 20 training sessions during the year

A total of 2283 early support discussions were held On the basis of the 2019 survey on psychosocial load we continued to develop working communities by tackling the issues raised and by initiating various development measures related to working communities leadership and interactionKesko utilises the multi-professional expertise of health care professionals and work ability specialists in HR for the prevention of the employeesrsquo incapacity for work and in maintaining work ability

Keskorsquos contribution to occupational health care Finland

europerson 2020 2019 2018563 492 447

In 2020 the sickness absence rate in the Group companies in Finland was 47 of hours worked (2019 46) Approximately 716 (2019 732) of sickness absences were short-term absences In the other countries the sickness absence rate was 60 (2019 48) Statistics on injuries in Finland and breakdowns of sickness absences by country are presented in the tables on page 64 In the other operating countries a total of 12 injuries occurred resulting in sickness absences of more than three days in 2020 (2019 52) The corresponding figure in Finland was 157 (2019 163)



injuries and occupational diseases in Finland 2020 2019 2018

Men Women TotalFatal injuries 0 0 0 0 0Occupational injuries excl commuting injuries 113 44 157 163 181Commuting injuries 29 25 54 73 67Injury ratesup1million working hours 11 12 13Average degree of injury severity days 377 382 316Suspected occupational diseases 3 1 4 5 3Occupational diseases 2 1 3 1 2Sick days due to occupational injuries commuting injuries and occupational diseases 4427 3626 8053 9007 8040Per employee 08 09 08

The calculation method small injuries ie those leading to absence of less than three days are not included in the figures Statistics do not include contractorssup1 Excl small injuries and commuting injuries calculated with actual working hours

injuries and occupational diseases in other operating countries

2020Fatal injuries 0Occupational injuries excl commuting injuries 12Commuting injuries 1Injury ratesup1 million working hours 66Suspected occupational diseases 0Occupational diseases 0

sup1 Excl small injuries and commuting injuries calculated with actual working hours

0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960

Trend in number of sick days

2018 2019 2020Finland 5960 6416 6536Other operating countries 6179 5700 5679

Sick daysmillion working hours

FinlandOther operating countries

5700


5679

23

Sickness absences by country in 2020 Finland Sweden Norway Estonia Latvia Lithuania Poland

Total number of sick days 127452 16810 36941 1536 1086 415 10865Per employee 123 138 449 100 129 55 29Per million working hours 6536 7839 25534 4913 6402 2739 1414

The calculation method sick days per employee have been calculated on the average number of employees during the year Companies not included in the figures K-Bygg Oumlstergyllen AB Bygg amp Interioumlr i Katrineholm AB Bygg amp Interioumlr i Flen AB Bygg amp Interioumlr i Vingaringker AB



advancing occupational safety mindset and managementWe use the ISO 14001 and ISO 45001 standards among others The occupational safety and health policy contains measures to prevent reduce and remove injuries caused by working conditions occupational diseases and physical and mental load that is harmful to health

In 2020 we increased occupational safety management by initiating the planning for an extensive occupational safety risk assessment in each division which will be thoroughly implemented in 2021 in collaboration with various experts and divisions Occupational safety audits based on accident rates were performed in the car trade Towards the end of 2020 we updated the occupational safety training for stores by introducing e-learning training on assessing risks at work

We have identified the key risks to monitor by analysing deviations documented in our occupational health and occupational safety management systems The most typical deviations include slipping tripping falling manual lifting and moving and forklift driving Occupational accidents are regularly monitored by an accident insurance company and any serious occupational accidents are systematically reported to the management In expert positions commuting injuries have declined in number compared to the year before

Personnel representatives involved in occupational safety and health cooperation An occupational safety and health group and a cooperation group operate in Kesko The occupational safety and health delegates and shop stewards participate in the planning roll-out and follow-up of occupational health and safety matters The cooperation involves active support for personnel wellbeing at work and proactive identification of risks by the personnel Realisation of the agreed targets is evaluated on a quarterly basis in all business areas

We invest in personnel wellbeing and occupational safety competence First aid and occupational safety training is organised in all divisions on a regular basis During the year we updated the training by introducing a new K first aid and safety training section which offers a combination of training for first aid early fire suppression and threatening situations In addition we developed a new e-coaching programme for the assessment of risks at work The personnel have the opportunity to study occupational safety both through contact coaching and independently through e-learning Occupational health and safety topics are part of the induction of new employees



We promote a holistic approach to employee health and organise various programmes that support wellbeing and health from versatile wellbeing lectures to wellbeing coaching programmes lasting 6 months We provide training in stress management self-management and physical wellbeing for example and a new training to support mental wellbeing and we monitor the effectiveness of the training Both online medical examinations and appointments for medical examinations are offered to personnel at regular intervals In 2020 we launched a pilot programme for managers to manage their own wellbeing In addition we described the mandatory training related to wellbeing expertise as part of the learning path of a manager We have offered occupational safety training to retailers and store employees and implemented an online course on assessing risks at work for their use


OCCUPATIONAL WELLBEING AND WORK CAPACITY


We will improve work motivation and job satisfaction

Self-management compliant with the K Well model has been emphasised during the Covid-19 pandemic We made wellbeing issues a more integral part of other coaching and manager training During the Covid-19 pandemic we also dealt with health and security matters as part of strategic info sessions in different business areas We launched several services to support in particular mental wellbeing for the personnelrsquos use These also offered excellent support during the exceptional circumstances caused by the coronavirus

We continue to focus on excellent control of the Covid-19 pandemic from the perspective of health and security of the personnel and reduction of identified risks to support business operations We will actively monitor the experiences of the employees under the exceptional circumstances and actively and in an agile way tackle issues that need developing by anticipating and minimising the risks involved We will improve the employee experience in various ways

To support business operations we will develop a longterm contingency plan for situations like pandemics which takes into account psychosocial coping and strengthening of resilience of personnel and other stakeholders

We will reduce the number of sickness absences accidents at work and numbers for premature retirement due to disability

We rolled out a work ability management system for use by managers HR and occupational health care to manage the challenges of sickness absences and working capacity and we updated processes and training for work ability management We built a reporting system to support management with information which includes the key indicators in business areas for wellbeing management

The monitoring of sickness absences caused by occupational accidents is also included in the work ability management system We report all serious occupational accidents and their costs to the management In 2020 we improved the use of various systems in occupational safety management The labour protection personnel played an active role in the prevention of the Covid-19 pandemic and in updating the risk assessment

We will increase the active use of the work capacity management system and the management of anticipatory indicators for sickness absences and work capacity and reporting of occupational injuries with a new reporting model in cooperation with the businesses

With the Fix your Mind and Back project we will strengthen anticipatory wellbeing and preparedness for work ability risks In all occupational health occupational safety and wellbeing activities we will consider the challenges of mental wellbeing the spine and the rest of the musculoskeletal system

We will include a holistic assessment of occupational safety risks in business risk management and work together to produce a risk management plan at the division level which has been approved by the businesses



A changing operating environment calls for continuous competence development404-1 404-2

The systematic business-driven development of personnel competencies is a critical factor for future success The transformation of the trading sector digitalisation and continuous changes in working life act as drivers for future development needs

Key areas of competence building in K Group arebull Leadership and managementbull Knowledge work and toolsbull Interaction and self-management skillsbull Training for store personnel sales service and product

knowledge

We offer managers a large variety of training programmes which support daily managerial work on topics such as performance management recruiting remuneration and employment law We especially focus on continuous performance management and the provision of feedback and support this with various training programmes

In 2020 we continued providing training on Keskorsquos leadership fundamentals for new managers As new sections to complement the offering we added virtual interaction and the important role of the manager in this and support for leadership during the pandemic

The development of knowledge work comprises the development of teamwork tools collaboration and meeting practices and emphasising open information In 2020 we

carried out a large number of training sessions related to information systems and forms of cooperation in knowledge work such as good meeting practices inclusion and facilitation skills With good knowledge work expertise and stable telecommunications links we were able to ensure smooth transition to working remotely to an exceptionally broad extent

To support wellbeing at work we focused on self-management and the development of interaction skills In 2020 we organised training for example on self-management time management networking and influencing and negotiation skills

Due to the Covid-19 pandemic some trainings were cancelled in the spring and online trainings were carried out shorter

training for store personnelVia K-Academy we provide store personnel with professional training in the form of trainings and e-learning as well as an opportunity to complete vocational degrees In 2020 we had the opportunity to utilise K-Academyrsquos learning paths for competence development and career planning In addition we produced a competence development guide for stores Since 2018 we have been training workplace instructors for stores and by the end of 2020 867 workplace instructors had been trained



COMPETENCE DEVELOPMENT


We conduct an annual performance and development review with every employee

Performance and development reviews are a systematic part of our performance management model Approximately 84 (85) of our employees have discussed their objectives and development with their manager

We will simplify the structure of performance and development reviews held with our managers and employees In addition to the comprehensive performance evaluation we will increase the weighting of people principles by including them in the performance and development reviews

We regularly train our managers

Due to the exceptional situation in Finland most of the training targeted to managers was held virtually We complemented the offering by adding training on virtual interaction and support for leadership in the midst of uncertainty

We will continue to systematically develop managerial work based on selected focus areas


In spring 2021 K-Citymarkets in the Helsinki region will cooperate with Careeria to organise a training programme for people with an immigrant background which aims at the employment of the participants in the trading sector During the training the participants will practise a wide range of customer service situations both orally and in writing working life skills and the Finnish language skills needed in working life During the training 1 to 2 parts of the Vocational Qualification in Business and Administration will be completed and Careeriarsquos own part of the qualification named ldquoOperating in Finnish working liferdquo

Kesko has agreed to offer on-the-job training for approximately 15 students in the Helsinki region in K-Citymarket stores After the training programme the aim is to first employ the participants in sales assistant jobs and as their skills improve to later offer the opportunity of promotion to manager positions

training days and costs in 20202020 2019

Training daysFinland 43078 74199- womensup1 17668 27281- mensup1 13769 30012Other countries 5872 64890- womensup1 1393 25163- mensup1 4296 12450Training days per employeeFinland 42 73- womensup1 28 44- mensup1 22 47Other countries 16 61- womensup1 11 54- mensup1 12 18Training costs euro millionFinland 15 23Other countries 05 06Training costs per employee euroFinland 144 224Other countries 124 601 eLearning not included Training hours of Senukai are not reported in 2020


Distribution by education at 31 Dec 2020

kpl

Comprehensive school 294 46 xxx

Upper secondary vocational education 4236 670 xxx

Lower university degree 904 143 xxx

Higher university degree 893 141 xxx

6327

Comprehensive school 46Upper secondary vocational education 670Lower university degree 143Higher university degree 141

Sweden and Norway not included


24


Performance management PERFORMANCE AND DEVELOPMENT REVIEWS AND PERFORMANCE ASSESSMENT AS TOOLS FOR JOB SATISFACTION404-3

Our employees are given feedback on their performance and development opportunities in annual performance and development reviews Target setting performance and development reviews and performance assessment are carried out in all Kesko Group companies and operating countries

In development reviews we discuss the employeersquos competencies and motivation career hopes the quality and development of managerial work and the whole working community Finally a personal development plan is created for the employee

The purpose of performance review is to give feedback on the personrsquos performance during the previous year

support their development and encourage them to improve their performance Should the performance not meet expectations we will support the employeersquos progress through a separate process Uniform criteria ensure a fair assessment of performance and competencies for all employees A systematic and effective performance management gives important information and forms a basis for other HR processes

Personnel survey as tool for developing operationsThe personnel survey is among the key tools for improving methods of operation and managerial work and one way of listening to the views of the personnel We conducted a more extensive personnel survey in 2019 In 2020 we carried out pulse surveys in different business areas based on the needs of each business We used these pulse surveys to monitor personnel wellbeing and work capacity throughout the exceptional year In 2021 a comprehensive Group-level personnel survey will be conducted again in Finland Sweden Norway Poland and in the Baltic States



PERFORMANCE MANAGEMENT


We know the targets set for our work and receive feedback on our performance

According to the previous personnel survey conducted in 2019 93 of our personnel understood how their individual work effort contributed to achieving the common goals of their own unit Approximately 60 of personnel received regular feedback from their manager on their work performance

We will promote the managersrsquo ability to give feedback by focusing on it as part of performance management and manager trainings We will develop performance bonus models to better serve our business operations



HUMAN RIGHTS AND EQUALITY


We respect human rights and take them into account in all our operations

As part of the preparations for the Grouprsquos diversity and inclusion programme we carried out stakeholder surveys on our personnel and customers

We will continue the preparation of the diversity and inclusion programme and roll out some measures planned as part of it

We promote the implementation of gender equality in our own operations and supply chains

At the end of 2020 women accounted for two out of the seven members of the Board of Directors and two out of the eight members of the Group Management Board

To reduce the impact of language on gendered working life we prepared a change in HR to stop using gendered job titles and terms

In 2021 the number of women on the Group Management Board will increase to three as the new Executive Vice President in charge of corporate responsibility and public affairs will join Kesko

We promote equal opportunities and diversity405-1 406-1

Zero-tolerance for discriminationEqual opportunities fairness non-discrimination and equality are important principles that are observed at Kesko Kesko Corporation and its subsidiaries in Finland draw up statutory company-specific HR training equality and non-discrimination plans and define objectives for improvement

Kesko has established an Employee Equality and Diversity Group in accordance with a non-discrimination plan which handles matters related to non-discrimination and equality within the Group The Employee Equality and Diversity Group includes representatives of the employer personnel and labour protection functions Based on the working grouprsquos initiative in 2020 we drafted guidelines on how to react when a customer or a member of the working community speaks in a racist or otherwise derogatory manner

In 2020 we acted as one of the key partners in the Suitable Work for All project organised by the Finnish Association of People with Physical Disabilities and were involved in various events related to the project

No cases of discrimination were reported to us in 2020

Diverse working community In 2020 we prepared a programme for diversity and inclusion As part of the preparation in early 2020 we carried out stakeholder surveys on our customers personnel students administration investors and external experts on

matters related to this Based on these surveys we outlined the main goals and potential development activities of our programme to build a more diverse and inclusive K Group We identified for example the need to develop practices for the inclusion of foreign language speakers and to continue the work to promote the conditions for persons with partial working capacity to continue in working life We will continue to work on the programme in 2021

According to the diversity policy of Keskorsquos Board of Directors Kesko seeks to have a balanced representation of genders on the Board At the end of 2020 women accounted for two out of the seven members of the Board of Directors and two out of the eight members of the Group Management Board In 2021 the number of women on the Group Management Board will increase to three as

the new Executive Vice President in charge of corporate responsibility and public affairs will join Kesko


In the future immigrants will be an increasingly important target group for recruitment into service positions in the retail sector At present the highest number of immigrants are employed in the stores and warehouses of K Group

Employing people with an immigrant background will require new operating methods ndash for example the needs of people whose first language is not Finnish must be taken into account in guidelines and management

Read more about training for store personnel 70KESKOrsquoS YEAR 2020 I SuStainability

Years of service in Finland in 2020

kpl








12645

under 2 years 2702ndash5 years 2326ndash10 years 15211ndash15 years 12716ndash20 years 7821ndash25 years 57over 25 years 84


25

Years of service in the other operating countries in 2020

kpl








5025



26


People of various ages are an assetIn Finland the average age of the employees was 374 in 2020 In the other operating countries the average age of employees varied from 365 to 532 years

Long careers are not rare 1060 employees in Finland have worked at Kesko for over 25 years In Finland 346 of the employees have worked at Kesko for over 10 years and 654 under 10 years and in the other countries the figures were 251 and 749 respectively

WE PROMOTE THE REALISATION OF PAY EQUALITY405-2 The average annual salary of Kesko employees was euro41127 in Finland euro40050 in Sweden euro53773 in Norway euro18205 in Estonia euro15791 in Latvia euro17667 in Lithuania and euro17245 in Poland As Kesko Group operates in many lines of business average salary is not a good indicator of salary level or structure The wage groups and tables specified in the collective agreement are applied to jobs covered by the agreement such as sales assistants and warehouse workers Salaries are also influenced by role-based responsibility bonuses years of experience and the cost of living category of the locality

Besides the role and its requirements the salary of a specialist is determined by competence experience performance and results Kesko uses a job grade classification system At the beginning of 2020 the job grade classification system was extended to concern all jobs in Finland Estonia Latvia Lithuania and Poland

Percentage of women by employee category Finland

2020 2019 2018Top management 286 275 286Middle management 319 278 233Managers and specialists 476 471 468Workers and white-collar employees 507 504 535Total 498 493 518

Percentage of women by employee category other operating countries


Percentage of women and men of personnel Finland

Women Men Full-time 355 645Part-time 708 292Permanent 507 493Fixed-term 463 537Managers 456 544

Percentage of women and men of personnel other operating countries





K CODE OF CONDUCT


All of our personnel act in compliance with the K Code of Conduct

The entire personnel is obligated to annually commit to compliance with the K Code of Conduct In 2020 86 of the personnel signed the annual confirmation

We will continue to make the annual confirmation process more systematic and promote commitment to the K Code of Conduct through managerial work training and continuous visibility

We organise regular training on the K Code of Conduct

In 2020 we held 25 training events in which the various areas of the K Code of Conduct were discussed We arranged K Code of Conduct sessions for the key persons at Kesko in Sweden focusing especially on corruption and fraud-related issues

We will strengthen our compliance and ethics functions and continue to systematically promote awareness of the K Code of Conduct through various actions Our goal is to create a refresher course for the K Code of Conduct eLearning course which will focus on selected themes An active network of K Code of Conduct ambassadors support communications and implementation

The comprehensive roll-out of the job grade classification system means that comparison of salaries in comparable jobs is now possible in an even larger target group In jobs classified based on job grades in higher and middle management jobs womenrsquos salary was 96 of menrsquos salary for comparable jobs and 95 with manager and expert positions As a whole womenrsquos salary was 98 of menrsquos salary for comparable jobs

Equality in remuneration is considered as part of annual company-specific equality plans Gender is not a factor which influences remuneration and no significant differences between comparable jobs have been detected Equality plans strive to promote salary equality in jobs where comparisons can be made

K Compliance operating model strengthens compliance 205-1 205-2 205-3

The Board of Directors of Kesko has confirmed the K Compliance operating model for Kesko The operating model will reinforce Keskorsquos compliance with laws rules and regulations The K Code of Conduct forms the core and basis of the operating model Group-wide programmes confirmed on the basis of the operating model concern key laws which if violated in our business operations could result in significant adverse effects for Kesko such as serious financial or reputational risks These programmes

include combatting corruption and bribery competitive law data protection and consumer protection

The K Compliance operating model confirms the organisation and steering model for the compliance function The operating model is steered by the identification of the key compliance risks related to Keskorsquos strategy and business Risks related to corruption are discussed as part of Kesko Grouprsquos risk management in accordance with the compliance operating model Key risks

are identified assessed managed monitored and reported regularly as part of business operations in all operating countries This includes risks related to corruption The most significant corruption risks are related to real estate and store site projects and purchasing of goods and services In 2020 we conducted a separate sustainability risk assessment in which we reviewed the corruption risk related to the supply chains In 2020 the prevention of malpractice was one of the focus areas for Keskorsquos corporate security function



1

Code of Conduct

EN Guide for Kesko personnel

Keskorsquos anticorruption principles were included in the K Code of Conduct guidelines published in 2016 Among the key principles are ldquoWe do not offer or accept bribesrdquo ldquoWe comply with the Kesko policies on hospitality and giftsrdquo and ldquoWe avoid conflicts of interestrdquo The guidelines and the website have been published in the languages of all operating countries Kesko employees and business partners have their own versions of the K Code of Conduct All Kesko Group personnel are obliged to annually confirm their compliance with the K Code of Conduct

We have prepared an eLearning package for employees to internalise the K Code of Conduct We also organise K Code of Conduct training each year in Keskorsquos operating countries for the management of the units and local Group companies with a focus on anticorruption activities In anticorruption activities the themes of the training concern offering and accepting gifts and hospitality accepting and providing sponsorship and donations understanding and avoiding conflicts of interest and the rules for lobbying We emphasise that we do not offer or accept bribes including kickbacks and that we do not make monetary donations to political parties

Keskorsquos contracting parties are also required to comply with the K Code of Conduct According to the Group guidelines K Code of Conduct contract clauses must be added to agreements under which the Kesko Group companies purchase products and services from outside the Group

Through the groupwide SpeakUp channel employees and business partners can report any violations of the K Code of Conduct In 2020 31 reports were submitted through the SpeakUp channel (2019 28) One report concerned a suspicion of corruption related to a goods supplier which led to the termination of the cooperation with the supplier in question Other reports were related to among other things managerial work the operation of the stores and phishing messages received by customers

In 2020 no corruption-related lawsuits against any Kesko Group company came to our knowledge



FREEDOM OF ASSOCIATION IS AN IMPORTANT VALUE407-1

Employeesrsquo freedom of association is a central characteristic of a welfare society Kesko respects its personnelrsquos freedom of association The freedom of association or the right to collective bargaining is not seen to be at risk in Keskorsquos operating countries

The freedom of association is also supported by the EWC (European Work Council) activities in cooperation with the Service Union United PAM In autumn 2019 an international meeting was organised on EWC activities with Keskorsquos representatives from Finland Sweden Norway Poland and the Baltic States The meeting was not arranged in 2020 due to the Covid-19 pandemic

Out of the total personnel 775 are covered by collective agreements So far no binding industrywide collective agreements have been drawn up in the Baltic countries and Poland

The control of the association of suppliersrsquo employees in highrisk countries and corrective actions are included in social responsibility audits

PERIODS OF NOTICE AND RESTRUCTURING SITUATIONS 402-1

Kesko complies with local legislation in all of its operating countries or the notice periods specified in collective agreements

In Finland the notice period is from two weeks to six months depending on the duration of employment In Finland the key statutes governing restructuring situations are included in the Act on Co-operation within Undertakings which stipulates that the employer must provide reasonable notice of decisions for consideration on the basis of negotiations The collective agreement for the trading sector does not specify any minimum notice periods applying to restructuring situations In terminations of employment legislation on public employment and enterprise services has been observed by providing coaching due to protection in the event of restructuring and by providing an adjusted training programme for those who would not be entitled to coaching due to protection in the event of restructuring on the basis of the said legislation

In Sweden the statutory minimum notice period in the event of organisational changes is 8ndash24 weeks depending on the nature of the change The collective agreement applying to operations in Sweden also does not specify minimum notice periods for restructuring situations

No specific minimum notice period for organisational changes is defined in Norway but both legislation and the collective agreement stipulate that personnel shall be informed of organisational changes at the earliest opportunity

In Estonia and Latvia the minimum notice period in restructuring situations is four weeks There are no collective agreements in these operating countries

In Poland the notice period with permanent and temporary employments varies from two weeks to three months depending on the duration of employment The same periods of notice are valid in restructuring situations as well



SUSTAINABILITY MANAGEMENT APPROACH AND REPORTING

Our most important stakeholders are the future generations Decisions we

make today will have an impact for decades to come We are committed to promoting the UN Sustainable Development Goals in our operations Our carbon neutrality targets renewable energy electric cars and K Fishpaths collaboration as well as our plastics and packaging policies are examples of how we as a major operator can impact the future

Matti Kalervo Vice President of

Corporate Responsibility

K Group is a major international and local operator and our activities have an impact on the whole society We work in close cooperation with various stakeholders and have some 19 million customer encounters every day at our stores and online In 2020 the Covid-19 pandemic brought changes to our interaction with stakeholders as meetings and contacts often took place remotely instead of face-to-face Online shopping grew as did the importance of our digital channels for customer communications

STAKEHOLDER ENGAGEMENT




Key stakeholders Engagement and channels for interaction

Key topics of interest and concern for our stakeholders in 2020

How we have addressed stakeholder expectations

Retailers and store staff bull Retailer events and meetings were mostly held remotely due to the Covid-19 pandemic

bull Electronic communication channels and Kehittyvauml kauppa common trade magazine

bull Responsible operating principles for K-retailers and K-stores (K Code of Conduct)

bull K Grouprsquos first joint virtual event K-Team Live

Since the beginning of the Covid-19 pandemic it has been critical for K Group to ensure that shopping is safe at the stores and does not endanger the health of staff or customers

The K-retailersrsquo work is based on understanding the needs of the local community

We planned safety measures for the stores and our logistics together with experts We increased customer communications in the stores and in social media channels We developed new services such as dedicated shopping hours for at-risk groups more online services for groceries home delivery services and a new helpline and phone order service for people over 70 We compile the ldquoLittle Big Deedsrdquo of our retailers and publish them on our website and in social media

Customers bull Daily customer encounters bull Customer service channels and

applications bull Customer surveys bull Social media

According to the Food Trends 2020 survey the biggest factors influencing consumersrsquo purchasing decisions are conscious consumption the aim to achieve holistic wellbeing and the desire to become a better cook Customers want easy-to-use vegetarian food options to be added to the selection Companies are now expected to provide even more transparent information on where their products come from how working conditions at factories and premises are monitored and how the environmental impact of products is minimised

We added products made from food waste as well as more vegetarian convenience foods and plant protein products to our selections We added a new Nutrition feature to the K-Ostokset service that allows customers to monitor their consumption of sugar salt red meat fish and vegetables

To improve transparency in our supply chains we launched the Tracing Our Products website in autumn 2020 where we provide information the origin of products and their journey to the shelves of K-stores Towards the end of the year we asked our customers for their opinion on the website through our Kylauml customer community The respondents wanted coffee and bananas to be added as new products and asked for information to be displayed at the stores as well In 2021 we will add QR codes to Pirkka and K-Menu tuna cans that will allow customers to easily trace the origin of the product

Investors shareholders analysts and other representatives of capital markets

bull General Meeting bull Results announcements bull Press conferences bull Investor web pages social media channels

and other digital channels bull Investor and analyst meetings bull Surveys and assessments bull Personal dialogue

The questions posed by analysts and investors regarding sustainability concerned such topics as mitigating climate change Science Based Targets for emissions sustainable products transparent purchasing channels and food waste Mitigating climate change was the key sustainability topic at investor meetings

We made progress towards a carbon neutral K Group by increasing the share of electricity and heat produced with renewable energy We joined the CDP Supply Chain programme and are challenging our suppliers to cut their emissions

We strengthened our investor communications by posting more actively on social media and publishing podcasts and blog texts about topics of interest to investors

In the annual Webranking survey conducted by Comprend Keskorsquos website was ranked as the second best corporate website in Finland In the Annual Report on Annual Reports survey Keskorsquos Annual Report 2019 was assessed to be the second best in Finland and the 28th best overall






Kesko personnel and potential employees

bull Performance and competence personnel survey development discussions and daily interaction

bull Co-operation with personnel bull Organisational communication and

feedback and discussion channels for the personnel

bull Pulse surveysbull SpeakUp reporting channel bull K Code of Conduct bull Student and recruitment events

The most common questions posed by personnel during the Covid-19 pandemic concerned safety measures in various tasks during the different stages of the pandemic coronavirus testing ergonomics in remote working and how to maintain interaction and team spirit while working remotely

There was a special emphasis during the Covid-19 pandemic on ensuring the health and safety of the personnel using all available means We guaranteed access to Covid-19 testing without delay for all employees and supported the personnel and managers in many ways in remote work and coping with their work

Suppliers and service providers

bull Meetings with suppliers and partner events

bull K Code of Conduct and Principles and Practice of Socially Responsible Trading

bull Co-operation in accordance with fair trading practices

bull Audits and training

The impacts of the Covid-19 pandemic on the economy Finnish work and production were widely discussed by grocery trade suppliers The climate impacts of food and stores packaging and plastic and conscious consumption were also topics discussed

Building and technical trade customers especially B2B customers require information on the origin and quality of products

K Group the Association for Finnish Work and over 100 food product and home and speciality goods companies worked together with Ruokatieto yhdistys ry an association that communicates about food and the food production chain and Kotimaiset kasvikset ry an association that promotes Finnish vegetables and launched the Ole osa hyvaumln ketjua campaign (ldquoBe part of a chain of goodrdquo) aimed at encouraging Finns to increasingly favour products that provide employment in Finland and keep the wheels of the economy turning We made changes to the packaging of our own brand products in the grocery trade significantly reducing the amount of plastic Together with our suppliers we are constantly seeking new ways to add easily recyclable or reusable packaging and circular economy products to our selections We take sustainability into consideration even better in our sourcing criteria We increased transparency in our supply chains by publishing the Tracing Our Products website with PEFC-certified timber as one of the first products showcased

Society (media authorities non-governmental and other organisations and trade unions)

bull Meetings bull Media events and enquiries bull Activities in organisations bull Enquiries from NGOs

The issue of the security of supply and the sufficiency of food supplies at stores came up at the beginning of the Covid-19 crisis Media queries focused on the effects of the Covid-19 pandemic throughout the year Some of the frequently asked questions concerned the impact of the pandemic on store selections the safety of shopping face mask recommendations and remote work During the year we answered enquiries from NGOs regarding such topics as the sustainability of clothing brands and the environmental impacts of the purchasing chains

The Finnish food chain functioned well in the crisis and there was no shortage of food at any point K Grouprsquos strengths proved to be its domestic selections nationwide store network and the retailer business model which adapts to new circumstances in an agile manner The Confederation of Finnish Industries (EK) and ten leading companies in their own industries joined forces in spring 2020 to help Finland return to normal as safely as possible Read more about the Enter 2020 campaign We continued to develop our purchasing processes and improve the transparency of our supply chains We published our cotton policy and packaging policy as well as the Tracing Our Products website



GOOD CORPORATE GOVERNANCE AND FINANCE CUSTOMERS

Material aspects Economic performance Indirect economic impacts Anti-corruption Anti-competitive behaviour Compliance Grievance mechanisms for impacts on society Customer privacy

Customer health Product safety

Policies and commitments

Accounting policies Kesko Group complies with the International Financial Reporting Standards (IFRS) approved for adoption by the EU Corporate Governance principles Risk management principles Good trading principles in the food supply chainK Code of ConductData protection policy

Monitoring and control systems

Financial reporting and planningCompliance compliance programmes Prevention of malpractice internal audit K Code of Conduct Risk management Customer privacy

Keskorsquos Quality and Product Development Unitrsquos laboratory monitors the product safety and quality of own brand products and own imports in the grocery trade

Programmes projects and initiatives

Food store as well as building and home improvement store operations utilise the Hymy customer feedback system

The service level recognition and image of Keskorsquos chains are regularly monitored in brand surveys targeted at consumers in all product lines The same practice is applied to the K-Plussa customer loyalty programme and the grocery tradersquos own brand products Store-level customer satisfaction is measured by customer satisfaction surveys and the mystery shopping method in food stores and building and home improvement stores

Grievance mechanisms Employees can present questions and ideas for development through their manager as well as anonymously or in their own name using an electronic discussion channel

SpeakUp reporting channel

Plussacom K Consumer Service Chainsrsquo customer feedback systems

Boundaries Corporate governance Kesko Finance Kesko

Customer health and safety Keskorsquos own brand products and own imports Product and service information Keskorsquos own brand products and own imports Marketing communications Kesko Compliance Kesko

MANAGEMENT APPROACH



SOCIETY WORKING COMMUNITY

Material aspects Procurement practices Employment Labourmanagement relations Occupational health and safety Training Diversity and equal opportunities Equal remuneration Labour practices grievance mechanisms


Kesko requires that its business partners act in compliance with the K Code of Conduct guidelines We add K Code of Conduct contract clauses to agreements under which the Kesko Group companies purchase products and services from outside the Group

Good trading principles in the food supply chain

K Code of Conduct HR policy


Changes in the operating environment and in K Group are taken into account by adjusting objectives operating principles monitoring systems andor resources

Labour protection and HR


Thank the Producer K Well wellbeing modelTASY Employee Equality and Diversity Group Youth employment at K Group

Grievance mechanisms SpeakUp reporting channel Employees can present questions and ideas for development through their manager as well as anonymously or in their own name using an electronic discussion channel


Boundaries Economic performance Kesko Indirect economic impacts K Group Purchase practices K Group

Working community Kesko



RESPONSIBLE PURCHASING AND SUSTAINABLE SELECTIONS ENVIRONMENT

Material aspects Information and compliance of products and services Customer health and safety Assessment of suppliersrsquo working conditions Human rights Marketing communications

Energy Water Biodiversity Emissions Waste Food waste


Keskorsquos purchasing principles K Grouprsquos plastics policy K Grouprsquos animal welfare policy Product group specific sustainability policies Keskorsquos policy on chemicals for home textiles clothing leather goods shoes and upholstered furniture

K Grouprsquos environmental and energy policy UN Global Compact Initiative UN Sustainable Development Goals


Certification and audit systems related to production in high-risk countries approved by Kesko Supplier agreements require that suppliers and service provides comply with the principles of the K Code of Conduct and the amfori BSCI Code of Conduct Keskorsquos grocery trade requires that the manufacturers and producers of its own brand products have an international food safety certification Keskorsquos grocery trade approves the following audit procedures among others BRC IFS ISOFSSC 22000 SQF10002000 and GlobalGAP or Laatutarha The Supplier agreements require that suppliers and service provides comply with the principles of the K Code of Conduct and the amfori BSCI Code of Conduct Keskorsquos grocery trade requires that the manufacturers and producers of its own brand products have an international food safety certification Keskorsquos grocery trade approves the following audit procedures among others BRC IFS ISOFSSC 22000 SQF10002000 and GlobalGAP or Laatutarha The Quality and Product Development unitrsquos laboratory monitors the product safety and quality of own brand products and own imports in the grocery trade All of our food product operations have a self-control plan in place The laboratory is a T251 testing laboratory that has been accredited by the FINAS accreditation services and approved to comply with the SFSEN ISOIEC 17025 standard

Group Corporate Responsibility Advisory Board EnerKeycom monitoring system All of Onninenrsquos operations in all operating countries are ISO 14001 certified The operations of Kesko Logistics are ISO 14001 certified


The Principles and Practice of Socially Responsible Trading guide The Center for Child Rights and Corporate Social Responsibility

Science Based Targets Action plan for 2017ndash2025 under the retail sectorrsquos Energy Efficiency Agreement amfori Business Environmental Performance Initiative (BEPI) Keskorsquos timber and paper policy Keskorsquos fish and shellfish policy RSPO Finnish soy commitment and RTRS

Grievance mechanisms

K Consumer Service Chainsrsquo customer feedback systems SpeakUp reporting channel


Boundaries Information and compliance of products and services Customer health and safety Assessment of suppliersrsquo working conditions Human rights Marketing communications

Energy and water Kesko Biodiversity Kesko Emissions Scope 1 and 2 Kesko Scope 3 K-stores and supply chain Waste Finland Keskorsquos warehousing operations other operating countries stores Food waste Keskorsquos grocery trade division and K-food stores



REPORTING PRINCIPLES

REPORTING PRINCIPLES IN ACCORDANCE WITH THE GRI STANDARDS Since 2000 Kesko has annually reported on its corporate responsibility actions in accordance with the Global Reporting Initiative (GRI) guidelines for reporting on sustainable development The Sustainability section in Keskorsquos Annual Report is prepared in accordance with the GRI standards and it covers the key areas of economic social and environmental responsibility For each reported standard the GRI index refers to the year of the version used

Since 2014 Kesko takes account of the IIRC (International Integrated Reporting Council) Framework in its annual reporting Kesko applies in its operations the AA1000 AccountAbility Principles stakeholder inclusivity identification of material aspects and responsiveness to stakeholders Kesko has taken account of the ISO 26000 standard as a source document providing guidelines for corporate responsibility

This report has been prepared in accordance with the GRI Standards Core option Topic-specific Disclosures are reported with respect to the material topics for Kesko A comparison of the contents of the report and the GRI standards is given in the GRI index

The report is published in Finnish and in English The report is published online in PDF format

CHANGE IN THE STRUCTURE OF REPORTED COMPANYKesko reports Kesko Senukai Group which is part of Keskorsquos building and technical trade segment and operates in the Baltic countries and Belarus as a joint venture as of 1 July 2020 Kesko Senukai Group was reported as a subsidiary until 30 June 2020 In the financial GRI indicators in this report Kesko Senukai is included in the figures up until 30 June 2020 unless otherwise stated Kesko Senukai is not included in the figures for HR and the environment for the full year 2020 Comparison figures for previous years have not been adjusted and they comprise Kesko Senukai

ASSURANCE OF REPORTING An independent third party Deloitte Oy has provided assurance for the numerical data on economic social and environmental responsibility in the Finnish language Sustainability section of the Annual Report The congruence between responsibility information presented in the Finnish and English versions has been checked The conclusions by Deloitte Oy are detailed in the assurance report The assurance is commissioned by the operative management of Kesko Corporation

GLOBAL COMPACT REPORTING The report describes Keskorsquos progress on the 10 principles of the Global Compact initiative The GRI index shows which General Disclosures and Topic-specific Disclosures have been used for evaluating

performance in fulfilling human rights labour rights environment principles and anticorruption principles

REPORT STAKEHOLDERS Various stakeholders use the report as their source of information when assessing Keskorsquos results in the different areas of responsibility The most important target groups for the report include investors shareholders analysts and rating agencies as well as society (the media authorities educational establishments and NGOs)

REPORTING PERIOD AND CONTACT INFORMATIONThis report describes the progress and results of responsibility work in 2020 It includes some information from January and February 2021 The report for 2019 was published in March 2020 The report for 2021 will be published in the spring of 2022

Further information on the topics covered in the report can be obtained from Keskorsquos contact persons

Kesko participates in the UN Global Compact initiative and is committed to observing ten generally accepted principles concerning

human rights labour standards the environment and anti-corruption in all of its operating countries

Mikko Helander President and CEO


GRI INDEX KD = Keskorsquos Direction SU = Sustainability

CG = Corporate GovernanceFS = Financial Statements

CODE GRI CONTENT LOCATION OMISSIONS FURTHER INFORMATIONGLOBAL COMPACT

STANDARD VERSION

GRI 102 GENERAL STANDARD DISCLOSURES 2016102-1 Name of the organisation KD 3

102-2 Activities brands products and services KD 5

102-3 Location of headquarters KD 3

102-4 Location of operations KD 3

102-5 Ownership and legal form KD 3

102-6 Markets served KD 3

102-7 Scale of the organisation KD 3

102-8 Information on employees and other workers

SU 56ndash59 There are no independent entrepreneurs among Kesko employees nor does suppliersrsquo or hired labour perform a significant part of the work There are no significant seasonal fluctuations in the number of employees

x

102-9 Supply chain SU 23ndash24

102-10 Significant changes to the organisation and its supply chain

KD 16

102-11 Precautionary Principle or approach KD 17-18

102-12 External initiatives keskofi Principles of corporate responsi-bility

102-13 Membership of associations keskofi Activities in organisations

102-14 Statement from senior decisionmaker KD 6ndash8

102-15 Key impacts risks and KD 17-18 KD 20

102-16 Values principles standards and norms of behaviour

keskofi K Code of Conduct

x




STANDARD VERSION

102-17 Mechanisms for advice and concerns about ethics

keskofi Reporting concerns and instances of non-compliance

x

102-18 Governance structure CG 5

102-19 Delegating authority CG 12ndash14 keskofi Sustainability governance

102-20 Executive-level responsibility for economic environmental and social topics

EVP CFO EVP Human Resources and Corporate Responsibility

Both are members of the Group Management Board

102-21 Consulting stakeholders on economic environmental and social topics

SU 76ndash77

102-22 Composition of the highest governance body and its committees

CG 7ndash14

102-23 Chair of the highest governance body CG 7ndash14

102-24 Nominating and selecting the highest governance body

CG 7ndash14

102-25 Conflicts of interest CG 7ndash14 Kesko complies with the Finnish Corporate Governance Code for Listed Companies

102-26 Role of highest governance body in setting purpose values and strategy

CG 7ndash14

102-28 Evaluating the highest governance bodys performance

CG 7ndash14 Only the Boards self-assessment has been reported

102-29 Identifying and managing economic environmental and social impacts

CG 7ndash14

102-30 Effectiveness of risk management processes CG 18ndash19

102-31 Review of economic environmental and social topics

CG 18ndash19

102-32 Highest governance bodys role in sustainability reporting

CG 10

102-33 Communicating critical concerns CG 17

102-35 Remuneration policies CG 23-29

102-40 List of stakeholder groups SU 77ndash78

102-41 Collective bargaining agreements SU 74 x

102-42 Identifying and selecting stakeholders SU 77ndash78




STANDARD VERSION

102-43 Approach to stakeholder engagement SU 77ndash78

102-44 Key topics and concerns raised SU 77ndash78

102-45 Entities included in the consolidated financial statements

FS 56ndash58 FS 117-121

102-46 Defining report content and topic Boundaries

SU 82

102-47 List of material topics keskofi Materiality assessment of corporate responsibility

102-48 Restatements of information No significant changes

Changes reported in connection with topic-specific information

102-49 Changes in reporting The reporting of Kesko Senukai Group which is operates in the Baltic countries and Belarus changed from a subsidiary to a joint venture during 2020

102-50 Reporting period SU 82

102-51 Date of most recent report SU 82

102-52 Reporting cycle SU 82

102-53 Contact point for questions regarding the report

keskofi Contacts responsibility

102-54 Claims of reporting in accordance with the GRI Standards

SU 82

102-55 GRI content index SU 83-91

102-56 External assurance SU 92ndash93

GRI 103 MANAGEMENT APPROACH 2016103-1 Explanation of the material topic and its

BoundarySU 79ndash81

103-2 The management approach and its components

SU 79ndash81

103-3 Evaluation of the management approach SU 79ndash81

TOPIC-SPECIFIC CONTENT

Topic-specific content is reported regarding aspects identified as material




STANDARD VERSION

ECONOMIC IMPACTS201 Economic performance 2016

201-1 Direct economic value generated and distributed

SU 8-9

201-2 Financial implications and other risks and opportunities due to climate change

KD 17 Monetary evaluations or realisations have not been reported for risks and opportunities Information is not available as climate change is difficult to estimate

x

201-3 Defined benefit plan obligations and other retirement plans

SU 60

201-4 Financial assistance received from government

SU 9

203 Indirect economic impacts 2016

203-1 Infrastructure investments and servies supported

SU 13

204 Procurement practices 2016

204-1 Proportion of spending on local suppliers SU 23ndash24

205 Anti-corruption 2016

205-1 Operations assessed for risks related to corruption

SU 72ndash73 The number and percentage of business units have not been reported Information is not available as the risks related to corruption are part of a wider assessment of business risks

Risks related to corruption are discussed as part of Keskos risk managament Key risks are identified and assessed regularly throughout the year

x

205-2 Communication and training about anti-corruption policies and procedures

SU 72ndash73 Percentages have not been reported by personnel group or geographical region Information is not available

x

205-3 Confirmed incidents of corruption and actions taken

SU 72ndash73 x

206 Anti-competitive behaviour 2016

206-1 Legal actions for anti-competitive behaviour anti-trust and monopoly practices

SU 13




STANDARD VERSION

207 Taxes 2019

207-1 Approach to tax SU 10 Keskos tax policy

207-2 Tax governance control and risk management

SU 10 Keskorsquos tax policy

207-3 Stakeholder engagement and management concerns related to tax


207-4 Country-by-country reporting SU 11-12

ENVIRONMENTAL IMPACTS301 Materials 2016

301-3 Reclaimed products and their packaging materials

SU 50-54 Percentage calculation model in accordance with the GRI standard is not applicable to Keskos operations

Part of the information is reported in accordance with standard 306-2

302 Energy 2016

302-1 Energy consumption within the organisation SU 37ndash38 At some properties located in leased premises outside Finland the heat energy data is not reported because it is included in the lease or data is not available

Environmental reporting principlesThe energy consumption data from other countries is compiled from fuel and purchased energy consumption data reported by subsidiaries

x

302-3 Energy intensity SU 38 Environmental reporting principles x

302-4 Reduction of energy consumption SU 38ndash39 x

303 Water 2018

303-1 Interactions with water as a sharedresource

SU 45

303-5 Water consumption SU 45 At some properties located in leased premises outside Finland water consumption is included in the lease and data is not available for reporting

Environmental reporting principlesThe water consumption data from other countries is compiled from water billing or consumption data reported by subsidiaries

x

304 Biodiversity 2016

304-2 Significant impacts of activities products and services on biodiversity

SU 47-48 x

304-3 Habitats protected or restored SU 48-49 x




STANDARD VERSION

305 Emissions 2016

305-1 Direct (Scope 1) GHG emissions SU 40 Environmental reporting principles x

305-2 Energy indirect (Scope 2) GHG emissions SU 40 Environmental reporting principles x

305-3 Other indirect (Scope 3) GHG emissions SU 41 Scope 3 Inventory report x

305-4 GHG emissions intensity SU 41 x

305-5 Reduction of GHG emissions SU 42ndash44 x

305-7 Nitrogen oxides (NOx) sulphur oxides (SOx) and other significant air emissions

SU 41 Environmental reporting principles x

306 Effluents and waste 2016

306-2 Waste by type and disposal method SU 52 x

Food waste

- Food waste SU 53ndash54 Material topic without applicable standard

x

308 Supplier environmental assessment 2016

308-1 Supplier environmental assessment SU 28 Not reported by percentage Information not available

SOCIAL IMPACTS401 Employment 2016

401-1 New employee hires and employee turnover SU 56ndash59 In new employee hires not reported by age category and regional ratio not reported In employee turnover not reported by age category

x

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees

SU 60 keskofi Benefits and rewards

Benefits exceeding the statutory level have not been reported in detail Practices vary in different operating countries

402 LabourManagement relations 2016

402-1 Minimum notice periods regarding operational changes

SU 74 Arrangements compliant to legislation Legislation does not define minimum notice periods at the precision required by GRI

x




STANDARD VERSION

403 Occupational health and safety 2018

403-1 Occupational health and safety management system

SU 61ndash66

403-2 Hazard identification risk assessment and incident investigation

SU 61ndash66

403-3 Occupational health services SU 61ndash66

403-4 Worker participation consultation and communication on occupational health and safety

SU 61ndash66

403-5 Worker training on occupational health and safety

SU 61ndash66

403-6 Promotion of worker health SU 61ndash66

403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships

SU 61ndash66

403-8 Workers covered by an occupational health and safety management system

SU 61ndash66 Does not cover all personnel hired labour or contractors Figure and percentage not available

403-9 Work-related injuries SU 61ndash66 Not reported by injury type Not reported for hired labour or contractors Information not available

403-10 Work-related ill health SU 61ndash66 Not reported by occupational disease Not reported for hired labour or contractors Information not available

404 Training and education 2016

404-1 Average hours of training per year per employee

SU 67ndash68 Not reported by gender and employee category Information not available

x

404-2 Programmes for upgrading employee skills and transition assistance programmes

SU 67ndash68

404-3 Percentage of employees receiving regular performance and career development reviews

SU 69 Not reported by gender and employee category Information not available

x

405 Diversity and equal opportunity 2016

405-1 Diversity of governance bodies and employees

SU 70-71 Not reported by age category Information not available

x

405-2 Ratio of basic salary and remuneration of women to men

SU 71 x




STANDARD VERSION

406 Non-discrimination 2016

406-1 Incidents of discrimination and corrective actions taken

SU 70-71 x

407 Freedom of association and collective bargaining 2016

407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

SU 74 x

412 Human rights assessments 2016

412-1 Operations that have been subject to human rights reviews or impact

SU 22 Information about percentage is not available

The human rights assessment and commitment apply to all of Keskos divisions and operating countries

x

412-2 Employee training on human rights SU 22 Information about number of hours and percentage of employees trained is not available

x

414 Supplier social assessment 2016

414-1 New suppliers that were screened using social criteria

SU 25ndash28 The percentage of suppliers screened has not been separately out of all suppliers in high-risk countries

414-2 Negative social impacts in the supply chain and actions taken

SU 25ndash28

415 Public policy 2016

415-1 Political contributions SU 13 x

416 Customer health and safety 2016

416-1 Assessment of the health and safety impacts of product and service categories

SU 30 Percentage calculation model in accordance with the GRI standard is not applicable to Keskos operations

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services

SU 30

417 Marketing and labelling 2016

417-1 Requirements for product and service information and labelling

SU 30ndash31 Percentage calculation model in accordance with the GRI standard is not applicable to Keskos operations

417-2 Incidents of non-compliance information and labelling

SU 31

417-3 Incidents of non-compliance concerning marketing

SU 31




STANDARD VERSION

418 Customer privacy 2016

418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data

SU 13

419 Socioeconomic compliance 2016

419-1 Non-compliance with laws and regulations in the social and economic area

SU 13



INDEPENDENT LIMITED ASSURANCE REPORT

To the Management of Kesko OyjWe have been engaged by the management of Kesko Oyj (business identity code 0109862-8 hereinafter also the Company) to provide a limited assurance on the economic social and environmental indicators for the reporting period of January 1 2020 to December 31 2020 disclosed in the ldquoKeskorsquos Directionrdquo and ldquoSustainabilityrdquo sections of Keskorsquos Annual Report 2020 In terms of the Companyrsquos GRI Standards reporting and GRI Standards Content Index the scope of the assurance has covered economic social and environmental disclosures listed within the Topic-specific Standards as well as General Disclosures 102-8 102-41 and 102-54 (hereinafter Sustainability Information)

MANAGEMENTrsquoS RESPONSIBILITYThe Management of Kesko is responsible for the preparation of the Sustainability Information in accordance with the Reporting criteria as set out in the Companyrsquos reporting instructions and the GRI Sustainability Reporting Standards of the Global Reporting Initiative (hereinafter also the Reporting criteria) This responsibility includes designing implementing and maintaining internal control relevant to the preparation and fair presentation of the Sustainability Information that are free from material misstatement whether due to fraud or error selecting and applying appropriate criteria and making estimates that are reasonable in the circumstances

ASSURANCE PROVIDERrsquoS RESPONSIBILITYOur responsibility is to express a limited assurance conclusion on the Sustainability Information based on our engagement We conducted our assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised)

ISAE 3000 standard requires that we comply with ethical requirements and plan and perform the assurance engagement to obtain limited assurance whether any matters come to our attention that cause us to believe that the Sustainability Information has not been prepared in all material respects in accordance with the Reporting criteria

We did not perform any assurance procedures on the prospective information such as targets expectations and ambitions disclosed in the Sustainability Information Consequently we draw no conclusion on the prospective information Our assurance report is made in accordance with the terms of our engagement with Kesko We do not accept or assume responsibility to anyone other than Kesko for our work for this assurance report or for the conclusions we have reached

A limited assurance engagement with respect to responsibility related data involves performing procedures to obtain evidence about the Sustainability Information

The procedures performed depend on the practitionerrsquos judgment but their nature is different from and their extent is less than a reasonable assurance engagement They do not include detailed testing of source data or the operating effectiveness of processes and internal controls and consequently they do not enable us to obtain the assurance necessary to become aware of all significant matters that might be identified in a reasonable assurance engagement

Our procedures on this engagement included

bull Interviewing senior management of the Companybull Conducting interviews with employees responsible

for the collection and reporting of the Sustainability Information and reviewing of the processes and systems for data gathering including the aggregation of the data for the Sustainability Information

bull Reviewing internal and external documentation to verify to what extent these documents and data support the information included in the Sustainability Information and evaluating whether the information presented in the Sustainability Information is in line with our overall knowledge of corporate sustainability at Kesko

bull Performing analytical review procedures and testing data on a sample basis to assess the reasonability of the presented Sustainability Information

Translation from the Finnish original



bull Conducting interviews in Keskorsquos logistics centre in Hakkila through a video conference

bull Assessing that the Sustainability Information has been prepared in accordance with the Sustainability Reporting Standards (Core) of the Global Reporting Initiative

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion

OUR INDEPENDENCE QUALITY CONTROL AND COMPETENCESWe have complied with Deloittersquos independence policies which address and in certain cases exceed the requirements of the Code of Ethics for professional accountants issued by the International Ethics Standards Board for Accountants We have maintained our independence and objectivity throughout the year

Deloitte Oy applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements professional standards and applicable legal and regulatory requirements This engagement was conducted by a multidisciplinary team including assurance and sustainability expertise with professional qualifications Our team is experienced in providing sustainability reporting assurance

CONCLUSIONBased on the procedures we have performed nothing has come to our attention that causes us to believe that Keskorsquos Sustainability Information for the reporting period ended 31 December 2020 is not properly prepared in all material respects in accordance with the Reporting criteria

Our assurance statement should be read in conjunction with the inherent limitations of accuracy and completeness for sustainability information

Helsinki March 18 2021

Deloitte Oy

Jukka Vattulainen Teemu Jaatinen

Authorized Public Authorized Public Accountant Accountant



Keskorsquos Annual Report 2020 has four sections This section describes highlights in sustainability and the objectives and progress made in our sustainability work and provides key sustainability indicators in accordance with GRI standards

SUSTAINABILITY The following symbols indicate that additional information can be found either in this report or on our website

Read more on our website

Read more in the Annual Report

Highlights 2020 3

Sustainability strategy 2018ndash2022 4

Materiality assessment 5

SUSTAINABILITY THEMES 6

Society 7

Financial results and impacts 8

Taxes 10

K-retailers and store network 13

Donations sponsoring and charity 14

Selections and purchasing 15

Sustainability policies 17

Sustainable products 20

Efforts to promote human rights 22

Purchases from Finland and other countries 23

Suppliersrsquo audits and certificates 25

Climate and environment 32

Carbon neutral K Group 2025 33

Renewable energy and energy efficiency 37

Emissions 40

Water 45

Biodiversity 46

Circular economy and waste management 50

Food waste 53

Working community 55

Personnel statistics 56

Occupational capacity and work ability 61

Competence development 67

Performance management 69

Diversity inclusion and equality 70

K Code of Conduct 72

SUSTAINABILITY MANAGEMENT APPROACH AND REPORTING 75

Stakeholder engagement 76

Management approach 79

Reporting principles 82

GRI index 83

Independent Practitionerrsquos Assurance Report 92



HIGHLIGHTS 2020






















VISION




investment


sustainability work




STRATEGIC ACTIONS

1

2

3

4

5

6








Materiality matrix


Leve

l of s

take

hold

er c

once

rn








Climate change




information use

Biodiversity










IN THIS SECTION


SOCIETY


















expenditure


payments

Social security









Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods
























Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and


Customs duties

Excise duties





Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

































units





2 stores 55 177

1 store 113 365


310



14
















IN THIS SECTION












Cotton policy


Fish and shellfish

policy

Bangladesh Accord


training sessions

Palm oil policy





of total purchases

Thank the Producer

Local Food Dates












Palm oil policy












Plastics policy




Packaging policy













Cocoa policy



Cotton policy









environment

















(Allergiatunnus)



(Allergiatunnus)























suppliers of goods















LOCAL PRODUCTION













































SUPPLY CHAIN









A Outstanding


Morendashless


Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable








No Child Labour 100






Follow-up audits








No Child Labour 100








kpl


Good (B) 18 9 xx




203



16


kpl


Good (B) 3 3 x




115



17





























































IN THIS SECTION



































own operations

Emis

sion

s fr

om o

wn

oper

atio

ns



2025 20302020










5900000 tCO2e




PRODUCTS SOLD

1600000tCO2e


89000 tCO2e





















RENEWABLE ENERGY























































































LOGISTICS EMISSIONS












HOuSinG SOlutiOnS



















Water303-1



















Food

Energy

Water Raw


Climate and air

quality regulation



Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side


REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING

























habitats







Fishpaths


Over 900

gravel beds created

Almost 300









































Poland


Waste Poland




























IN THIS SECTION


WORKING COMMUNITY


















EMPLOYER IMAGE




























over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22








Parental leave2020

Finland Other










Pensions 201-3







infection






























europerson 2020 2019 2018563 492 447










0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960





5700


5679

23
































knowledge

























kpl





6327




24








































kpl








12645



25


kpl








5025



26

















K CODE OF CONDUCT

















1

Code of Conduct

































































































MANAGEMENT APPROACH


























































STANDARD VERSION










x



KD 16








x




STANDARD VERSION



x







SU 76ndash77


CG 7ndash14



CG 7ndash14



CG 7ndash14




CG 7ndash14



CG 18ndash19


CG 10









STANDARD VERSION




FS 56ndash58 FS 117-121


SU 82











SU 82






SU 79ndash81







STANDARD VERSION



SU 8-9



x


SU 60


SU 9



SU 13







x



x


SU 72ndash73 x



SU 13




STANDARD VERSION

207 Taxes 2019











302 Energy 2016



x



303 Water 2018


SU 45



x



SU 47-48 x





STANDARD VERSION

305 Emissions 2016










Food waste


x





x







x




STANDARD VERSION



SU 61ndash66


SU 61ndash66



SU 61ndash66


SU 61ndash66



SU 61ndash66








x


SU 67ndash68



x




x


SU 71 x




STANDARD VERSION



SU 70-71 x



SU 74 x





x


x





SU 25ndash28







SU 30





SU 31


SU 31




STANDARD VERSION



SU 13



SU 13



























Deloitte Oy





HIGHLIGHTS 2020






















VISION




investment


sustainability work




STRATEGIC ACTIONS

1

2

3

4

5

6








Materiality matrix


Leve

l of s

take

hold

er c

once

rn








Climate change




information use

Biodiversity










IN THIS SECTION


SOCIETY


















expenditure


payments

Social security









Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods
























Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and


Customs duties

Excise duties





Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

































units





2 stores 55 177

1 store 113 365


310



14
















IN THIS SECTION












Cotton policy


Fish and shellfish

policy

Bangladesh Accord


training sessions

Palm oil policy





of total purchases

Thank the Producer

Local Food Dates












Palm oil policy












Plastics policy




Packaging policy













Cocoa policy



Cotton policy









environment

















(Allergiatunnus)



(Allergiatunnus)























suppliers of goods















LOCAL PRODUCTION













































SUPPLY CHAIN









A Outstanding


Morendashless


Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable








No Child Labour 100






Follow-up audits








No Child Labour 100








kpl


Good (B) 18 9 xx




203



16


kpl


Good (B) 3 3 x




115



17





























































IN THIS SECTION



































own operations

Emis

sion

s fr

om o

wn

oper

atio

ns



2025 20302020










5900000 tCO2e




PRODUCTS SOLD

1600000tCO2e


89000 tCO2e





















RENEWABLE ENERGY























































































LOGISTICS EMISSIONS












HOuSinG SOlutiOnS



















Water303-1



















Food

Energy

Water Raw


Climate and air

quality regulation



Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side


REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING

























habitats







Fishpaths


Over 900

gravel beds created

Almost 300









































Poland


Waste Poland




























IN THIS SECTION


WORKING COMMUNITY


















EMPLOYER IMAGE




























over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22








Parental leave2020

Finland Other










Pensions 201-3







infection






























europerson 2020 2019 2018563 492 447










0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960





5700


5679

23
































knowledge

























kpl





6327




24








































kpl








12645



25


kpl








5025



26

















K CODE OF CONDUCT

















1

Code of Conduct

































































































MANAGEMENT APPROACH


























































STANDARD VERSION










x



KD 16








x




STANDARD VERSION



x







SU 76ndash77


CG 7ndash14



CG 7ndash14



CG 7ndash14




CG 7ndash14



CG 18ndash19


CG 10









STANDARD VERSION




FS 56ndash58 FS 117-121


SU 82











SU 82






SU 79ndash81







STANDARD VERSION



SU 8-9



x


SU 60


SU 9



SU 13







x



x


SU 72ndash73 x



SU 13




STANDARD VERSION

207 Taxes 2019











302 Energy 2016



x



303 Water 2018


SU 45



x



SU 47-48 x





STANDARD VERSION

305 Emissions 2016










Food waste


x





x







x




STANDARD VERSION



SU 61ndash66


SU 61ndash66



SU 61ndash66


SU 61ndash66



SU 61ndash66








x


SU 67ndash68



x




x


SU 71 x




STANDARD VERSION



SU 70-71 x



SU 74 x





x


x





SU 25ndash28







SU 30





SU 31


SU 31




STANDARD VERSION



SU 13



SU 13



























Deloitte Oy
















VISION




investment


sustainability work




STRATEGIC ACTIONS

1

2

3

4

5

6








Materiality matrix


Leve

l of s

take

hold

er c

once

rn








Climate change




information use

Biodiversity










IN THIS SECTION


SOCIETY


















expenditure


payments

Social security









Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods
























Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and


Customs duties

Excise duties





Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

































units





2 stores 55 177

1 store 113 365


310



14
















IN THIS SECTION












Cotton policy


Fish and shellfish

policy

Bangladesh Accord


training sessions

Palm oil policy





of total purchases

Thank the Producer

Local Food Dates












Palm oil policy












Plastics policy




Packaging policy













Cocoa policy



Cotton policy









environment

















(Allergiatunnus)



(Allergiatunnus)























suppliers of goods















LOCAL PRODUCTION













































SUPPLY CHAIN









A Outstanding


Morendashless


Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable








No Child Labour 100






Follow-up audits








No Child Labour 100








kpl


Good (B) 18 9 xx




203



16


kpl


Good (B) 3 3 x




115



17





























































IN THIS SECTION



































own operations

Emis

sion

s fr

om o

wn

oper

atio

ns



2025 20302020










5900000 tCO2e




PRODUCTS SOLD

1600000tCO2e


89000 tCO2e





















RENEWABLE ENERGY























































































LOGISTICS EMISSIONS












HOuSinG SOlutiOnS



















Water303-1



















Food

Energy

Water Raw


Climate and air

quality regulation



Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side


REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING

























habitats







Fishpaths


Over 900

gravel beds created

Almost 300









































Poland


Waste Poland




























IN THIS SECTION


WORKING COMMUNITY


















EMPLOYER IMAGE




























over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22








Parental leave2020

Finland Other










Pensions 201-3







infection






























europerson 2020 2019 2018563 492 447










0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960





5700


5679

23
































knowledge

























kpl





6327




24








































kpl








12645



25


kpl








5025



26

















K CODE OF CONDUCT

















1

Code of Conduct

































































































MANAGEMENT APPROACH


























































STANDARD VERSION










x



KD 16








x




STANDARD VERSION



x







SU 76ndash77


CG 7ndash14



CG 7ndash14



CG 7ndash14




CG 7ndash14



CG 18ndash19


CG 10









STANDARD VERSION




FS 56ndash58 FS 117-121


SU 82











SU 82






SU 79ndash81







STANDARD VERSION



SU 8-9



x


SU 60


SU 9



SU 13







x



x


SU 72ndash73 x



SU 13




STANDARD VERSION

207 Taxes 2019











302 Energy 2016



x



303 Water 2018


SU 45



x



SU 47-48 x





STANDARD VERSION

305 Emissions 2016










Food waste


x





x







x




STANDARD VERSION



SU 61ndash66


SU 61ndash66



SU 61ndash66


SU 61ndash66



SU 61ndash66








x


SU 67ndash68



x




x


SU 71 x




STANDARD VERSION



SU 70-71 x



SU 74 x





x


x





SU 25ndash28







SU 30





SU 31


SU 31




STANDARD VERSION



SU 13



SU 13



























Deloitte Oy







Materiality matrix


Leve

l of s

take

hold

er c

once

rn








Climate change




information use

Biodiversity










IN THIS SECTION


SOCIETY


















expenditure


payments

Social security









Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods
























Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and


Customs duties

Excise duties





Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

































units





2 stores 55 177

1 store 113 365


310



14
















IN THIS SECTION












Cotton policy


Fish and shellfish

policy

Bangladesh Accord


training sessions

Palm oil policy





of total purchases

Thank the Producer

Local Food Dates












Palm oil policy












Plastics policy




Packaging policy













Cocoa policy



Cotton policy









environment

















(Allergiatunnus)



(Allergiatunnus)























suppliers of goods















LOCAL PRODUCTION













































SUPPLY CHAIN









A Outstanding


Morendashless


Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable








No Child Labour 100






Follow-up audits








No Child Labour 100








kpl


Good (B) 18 9 xx




203



16


kpl


Good (B) 3 3 x




115



17





























































IN THIS SECTION



































own operations

Emis

sion

s fr

om o

wn

oper

atio

ns



2025 20302020










5900000 tCO2e




PRODUCTS SOLD

1600000tCO2e


89000 tCO2e





















RENEWABLE ENERGY























































































LOGISTICS EMISSIONS












HOuSinG SOlutiOnS



















Water303-1



















Food

Energy

Water Raw


Climate and air

quality regulation



Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side


REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING

























habitats







Fishpaths


Over 900

gravel beds created

Almost 300









































Poland


Waste Poland




























IN THIS SECTION


WORKING COMMUNITY


















EMPLOYER IMAGE




























over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22








Parental leave2020

Finland Other










Pensions 201-3







infection






























europerson 2020 2019 2018563 492 447










0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960





5700


5679

23
































knowledge

























kpl





6327




24








































kpl








12645



25


kpl








5025



26

















K CODE OF CONDUCT

















1

Code of Conduct

































































































MANAGEMENT APPROACH


























































STANDARD VERSION










x



KD 16








x




STANDARD VERSION



x







SU 76ndash77


CG 7ndash14



CG 7ndash14



CG 7ndash14




CG 7ndash14



CG 18ndash19


CG 10









STANDARD VERSION




FS 56ndash58 FS 117-121


SU 82











SU 82






SU 79ndash81







STANDARD VERSION



SU 8-9



x


SU 60


SU 9



SU 13







x



x


SU 72ndash73 x



SU 13




STANDARD VERSION

207 Taxes 2019











302 Energy 2016



x



303 Water 2018


SU 45



x



SU 47-48 x





STANDARD VERSION

305 Emissions 2016










Food waste


x





x







x




STANDARD VERSION



SU 61ndash66


SU 61ndash66



SU 61ndash66


SU 61ndash66



SU 61ndash66








x


SU 67ndash68



x




x


SU 71 x




STANDARD VERSION



SU 70-71 x



SU 74 x





x


x





SU 25ndash28







SU 30





SU 31


SU 31




STANDARD VERSION



SU 13



SU 13



























Deloitte Oy








IN THIS SECTION


SOCIETY


















expenditure


payments

Social security









Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods
























Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and


Customs duties

Excise duties





Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

































units





2 stores 55 177

1 store 113 365


310



14
















IN THIS SECTION












Cotton policy


Fish and shellfish

policy

Bangladesh Accord


training sessions

Palm oil policy





of total purchases

Thank the Producer

Local Food Dates












Palm oil policy












Plastics policy




Packaging policy













Cocoa policy



Cotton policy









environment

















(Allergiatunnus)



(Allergiatunnus)























suppliers of goods















LOCAL PRODUCTION













































SUPPLY CHAIN









A Outstanding


Morendashless


Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable








No Child Labour 100






Follow-up audits








No Child Labour 100








kpl


Good (B) 18 9 xx




203



16


kpl


Good (B) 3 3 x




115



17





























































IN THIS SECTION



































own operations

Emis

sion

s fr

om o

wn

oper

atio

ns



2025 20302020










5900000 tCO2e




PRODUCTS SOLD

1600000tCO2e


89000 tCO2e





















RENEWABLE ENERGY























































































LOGISTICS EMISSIONS












HOuSinG SOlutiOnS



















Water303-1



















Food

Energy

Water Raw


Climate and air

quality regulation



Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side


REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING

























habitats







Fishpaths


Over 900

gravel beds created

Almost 300









































Poland


Waste Poland




























IN THIS SECTION


WORKING COMMUNITY


















EMPLOYER IMAGE




























over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22








Parental leave2020

Finland Other










Pensions 201-3







infection






























europerson 2020 2019 2018563 492 447










0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960





5700


5679

23
































knowledge

























kpl





6327




24








































kpl








12645



25


kpl








5025



26

















K CODE OF CONDUCT

















1

Code of Conduct

































































































MANAGEMENT APPROACH


























































STANDARD VERSION










x



KD 16








x




STANDARD VERSION



x







SU 76ndash77


CG 7ndash14



CG 7ndash14



CG 7ndash14




CG 7ndash14



CG 18ndash19


CG 10









STANDARD VERSION




FS 56ndash58 FS 117-121


SU 82











SU 82






SU 79ndash81







STANDARD VERSION



SU 8-9



x


SU 60


SU 9



SU 13







x



x


SU 72ndash73 x



SU 13




STANDARD VERSION

207 Taxes 2019











302 Energy 2016



x



303 Water 2018


SU 45



x



SU 47-48 x





STANDARD VERSION

305 Emissions 2016










Food waste


x





x







x




STANDARD VERSION



SU 61ndash66


SU 61ndash66



SU 61ndash66


SU 61ndash66



SU 61ndash66








x


SU 67ndash68



x




x


SU 71 x




STANDARD VERSION



SU 70-71 x



SU 74 x





x


x





SU 25ndash28







SU 30





SU 31


SU 31




STANDARD VERSION



SU 13



SU 13



























Deloitte Oy

















expenditure


payments

Social security









Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods
























Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and


Customs duties

Excise duties





Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

































units





2 stores 55 177

1 store 113 365


310



14
















IN THIS SECTION












Cotton policy


Fish and shellfish

policy

Bangladesh Accord


training sessions

Palm oil policy





of total purchases

Thank the Producer

Local Food Dates












Palm oil policy












Plastics policy




Packaging policy













Cocoa policy



Cotton policy









environment

















(Allergiatunnus)



(Allergiatunnus)























suppliers of goods















LOCAL PRODUCTION













































SUPPLY CHAIN









A Outstanding


Morendashless


Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable








No Child Labour 100






Follow-up audits








No Child Labour 100








kpl


Good (B) 18 9 xx




203



16


kpl


Good (B) 3 3 x




115



17





























































IN THIS SECTION



































own operations

Emis

sion

s fr

om o

wn

oper

atio

ns



2025 20302020










5900000 tCO2e




PRODUCTS SOLD

1600000tCO2e


89000 tCO2e





















RENEWABLE ENERGY























































































LOGISTICS EMISSIONS












HOuSinG SOlutiOnS



















Water303-1



















Food

Energy

Water Raw


Climate and air

quality regulation



Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side


REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING

























habitats







Fishpaths


Over 900

gravel beds created

Almost 300









































Poland


Waste Poland




























IN THIS SECTION


WORKING COMMUNITY


















EMPLOYER IMAGE




























over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22








Parental leave2020

Finland Other










Pensions 201-3







infection






























europerson 2020 2019 2018563 492 447










0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960





5700


5679

23
































knowledge

























kpl





6327




24








































kpl








12645



25


kpl








5025



26

















K CODE OF CONDUCT

















1

Code of Conduct

































































































MANAGEMENT APPROACH


























































STANDARD VERSION










x



KD 16








x




STANDARD VERSION



x







SU 76ndash77


CG 7ndash14



CG 7ndash14



CG 7ndash14




CG 7ndash14



CG 18ndash19


CG 10









STANDARD VERSION




FS 56ndash58 FS 117-121


SU 82











SU 82






SU 79ndash81







STANDARD VERSION



SU 8-9



x


SU 60


SU 9



SU 13







x



x


SU 72ndash73 x



SU 13




STANDARD VERSION

207 Taxes 2019











302 Energy 2016



x



303 Water 2018


SU 45



x



SU 47-48 x





STANDARD VERSION

305 Emissions 2016










Food waste


x





x







x




STANDARD VERSION



SU 61ndash66


SU 61ndash66



SU 61ndash66


SU 61ndash66



SU 61ndash66








x


SU 67ndash68



x




x


SU 71 x




STANDARD VERSION



SU 70-71 x



SU 74 x





x


x





SU 25ndash28







SU 30





SU 31


SU 31




STANDARD VERSION



SU 13



SU 13



























Deloitte Oy









Region euro million

Keskos purchases of

goods

K-retailers direct

purchases of goods
























Profit before taxes

Income taxes

Value-added taxes

With holding taxes

Real estate and


Customs duties

Excise duties





Profit before taxes

Income taxes

Value-added taxes

Withholding taxes

Real estate and


Customs duties

Excise duties

































units





2 stores 55 177

1 store 113 365


310



14
















IN THIS SECTION












Cotton policy


Fish and shellfish

policy

Bangladesh Accord


training sessions

Palm oil policy





of total purchases

Thank the Producer

Local Food Dates












Palm oil policy












Plastics policy




Packaging policy













Cocoa policy



Cotton policy









environment

















(Allergiatunnus)



(Allergiatunnus)























suppliers of goods















LOCAL PRODUCTION













































SUPPLY CHAIN









A Outstanding


Morendashless


Full auditsA

OutstandingB

GoodC

AcceptableD

InsufficientE

Unacceptable








No Child Labour 100






Follow-up audits








No Child Labour 100








kpl


Good (B) 18 9 xx




203



16


kpl


Good (B) 3 3 x




115



17





























































IN THIS SECTION



































own operations

Emis

sion

s fr

om o

wn

oper

atio

ns



2025 20302020










5900000 tCO2e




PRODUCTS SOLD

1600000tCO2e


89000 tCO2e





















RENEWABLE ENERGY























































































LOGISTICS EMISSIONS












HOuSinG SOlutiOnS



















Water303-1



















Food

Energy

Water Raw


Climate and air

quality regulation



Photosynthesis

Waste treatment

Water and

nutrient cycle

Beauty of nature

Loca

l food fr

om

unpollute

d nature

Div

erse

and

vi

able

cou

ntry

side


REGULATING amp

SU

PPO

RTIN

G

CULTURAL

P

ROVISIONING

























habitats







Fishpaths


Over 900

gravel beds created

Almost 300









































Poland


Waste Poland




























IN THIS SECTION


WORKING COMMUNITY


















EMPLOYER IMAGE




























over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22






over 55 years 1282 1016

12620



18


kpl






5026



19






17650



20


kpl






4028



21







365600



22








Parental leave2020

Finland Other










Pensions 201-3







infection






























europerson 2020 2019 2018563 492 447










0

2000

4000

6000

8000

2018 2019 2020

567957006179

653664165960





5700


5679

23
































knowledge

























kpl





6327




24








































kpl








12645



25


kpl








5025



26

















K CODE OF CONDUCT

















1

Code of Conduct

































































































MANAGEMENT APPROACH


























































STANDARD VERSION










x



KD 16








x




STANDARD VERSION



x







SU 76ndash77


CG 7ndash14



CG 7ndash14



CG 7ndash14




CG 7ndash14



CG 18ndash19


CG 10









STANDARD VERSION




FS 56ndash58 FS 117-121


SU 82











SU 82






SU 79ndash81







STANDARD VERSION



SU 8-9



x


SU 60


SU 9



SU 13







x



x


SU 72ndash73 x



SU 13




STANDARD VERSION

207 Taxes 2019











302 Energy 2016



x



303 Water 2018


SU 45



x



SU 47-48 x





STANDARD VERSION

305 Emissions 2016










Food waste


x





x







x




STANDARD VERSION



SU 61ndash66


SU 61ndash66



SU 61ndash66


SU 61ndash66



SU 61ndash66








x


SU 67ndash68



x




x


SU 71 x




STANDARD VERSION



SU 70-71 x



SU 74 x





x


x





SU 25ndash28







SU 30





SU 31


SU 31




STANDARD VERSION



SU 13



SU 13



























Deloitte Oy





KESKO ANNUAL REPORT SUSTAINABILITY

Documents

Transcript of KESKO ANNUAL REPORT SUSTAINABILITY